Ethical Management Initiatives

Of Fubon’s four core values – "integrity, sincerity, professionalism and innovation" – integrity is paramount. To foster a corporate culture that champions integrity and a sustainable operating environment, the Company has made it a priority to promote internal ethics norms and oversight and prevention mechanisms. The Corporate Governance and Sustainability Committee is responsible for supervising progress on ethical management initiatives, and the Corporate Governance team under the Committee’s ESG Task Force was put in charge of promoting ethical management practices. The team helps ensure that integrity and ethics are at the heart of management policies. The ESG Task Force reports to the Board of Directors on progress on ESG initiatives every six months.

Policies and Plans

The Company has consistently sought to strengthen its ethical norms to foster an ethical management environment while at the same time meeting its governance responsibilities to maintain the integrity of free markets. To achieve those goals, a "Code of Ethical Conduct" establishing standards of conduct for board directors and executives was established in 2006. That was followed in 2011 by "Ethical Corporate Management Best Practice Principles" for Company employees, subsidiaries, or Group companies or organizations with substantive control in the Company’s operations. The principles stipulate that before the Company engages in business with another party it should consider the ethical practices of the supplier or transaction partner to avoid doing business with entities involved in unethical behavior. They also mandate that when entering into a contract with another party, the contract shall include clauses that require compliance with ethical management policies and allow the Company to terminate or rescind the contract if the other party is involved in unethical conduct. The principles and subsequent revisions have been reported at shareholders’ meetings as a sign of the Company’s commitment to ethical management practices and policies.

With the growing adoption of ethical management norms at home and abroad, the Company revised its internal guidelines at the beginning of 2017 and also established "Procedures for Ethical Management and Guidelines for Conduct." These procedures ban corruption, bribes, and antitrust practices, and prohibit illegal political contributions, improper charitable donations and sponsorships, and insider trading. They also cover codes of conduct for conflict of interest avoidance, intellectual property rights and fair competition, and lay down training and internal control mechanisms.

Under the principle of “integrity", Fubon Financial Holdings also adopts preventative measures for business activities with higher risk of dishonest behavior. The internal management regulations include "Donation Management Policy" and "Financial Consumer Protection Management Guidelines" to further ensure that every donation is monitored and managed. The "Donation Procedure Management Regulations" was established in January 2019 to inspect donation procedures and track the use of donated funds through clear management practices. Also, in response to the increasingly important international issue of money laundering, we have established the “Anti-Money Laundering and Countering the Financing of Terrorism (AML/ CFT) Program" to prevent money laundering and help track down major crime. The "Employee Work Rules" of the Company and subsidiaries also clearly stipulate that employees must follow honest obligations.

Fubon Financial Holdings has formulated a clearly-defined system for ensuring the avoidance of conflicts of interests among directors. In addition to requiring directors to avoid certain situations stipulated by relevant laws and regulations, it also stipulates that directors shall independently recuse themselves if a potential conflict exists for various issues, including: matters involving the appointment of a manager of the Company or a board director or supervisor of a subsidiary, matters involving the lifting of non-competition restrictions, and the like. In addition, in order to implement relevant regulations governing how Fubon Financial Holdings and its subsidiaries may conduct transactions, the interests of the Company are given priority and fair trade principles are respected to prevent the pursuit of personal gain, please refer to page 41–44 of the 2018 Annual Report.

Commitment and Execution

1. Outside Engagement

Aside from posting policy statements on ethical management on the Company’ s website, Fubon has established a "Supplier Corporate Social Responsibility Code of Conduct" to encourage suppliers of the financial holding company and its subsidiaries to take their social responsibility seriously. Also, ethical behavior clauses are written into contracts with outside parties so that customers and business partners are made clearly aware of ethical management concepts.

Furthermore, in accordance with the TWSE's "Stewardship Principles for Institutional Investors" and the "increase the signings by institutional investors of the Stewardship Principles for Institutional Investors" part of FSC's "Corporate Governance Roadmap", all subsidiaries under Fubon Financial Holdings have become signatories by the end of 2018, and the signing progress is faster than the target set by competent authorities.

Type Signatories Endorsement Date
Investment Trust Fubon Securities Investment Trust 2016/8/10
Banking Taipei Fubon Bank 2018/6/28
Securities Company Fubon Securities 2018/6/30
Insurance Fubon Life 2018/10/26
Fubon Insurance 2018/11/2

2. Training and Evaluations

Fubon Financial Holdings and its subsidiaries provide training on standards of conduct and compliance to all new hires, and arrange compliance classes for all employees and internal control management training for supervisors. This comprehensive education and training ingrains such core values as integrity and discipline into employee culture.

Fubon Financial Holdings organizes mandatory digital classes for new personnel on the "Money Laundering Control Act" and "Personal Information Protection Act " and added three new classes on legal compliance: "Three Lines of Defense for Internal Control and Legal Compliance System", "Employee Legal Education and Prevention of Financial Fraud", "Critical Rules of the Financial Holding Company Act and Case Studies of Violations and Penalties". To ensure learning efficacy, all newly-hired employees must complete these classes and take a standardized test. In 2018, nearly 100% of new employees passed the risk management and legal compliance courses.

For supervisors, all basic level and mid-to-high level supervisors are required in 2018 to participate in courses on issues such as development trends of Fintech and Regtech and information security management practice. Newly-appointed supervisors were also required to complete classes on "Labor Laws and Regulations and Labor Inspection Practices" and "Three Lines of Defense Management System for Internal Control". These efforts instill knowledge of risk control among management personnel. The overall completion rate for the training was 99%.

The Company also regularly organizes mandatory training on risk management for all employees, with subjects including the "Personal Information Protection Act", "Money Laundering Control Act", and information security, in order to continuously enhance understanding of ethical and legal concepts among employees.

To comprehensively increase awareness and understanding of ethical conduct among all colleagues in Fubon Financial Holdings, we organized a digital class on "Ethical Conduct Guidelines" and required employees to sign an accompanying ethics pledge. The content covers the ban on offering and accepting bribes, how to avoid conflicts of interest, confidentiality, fiduciary duty to stakeholders, establishing ethical business relationships, and procedures for encouraging the reporting of unethical conduct. After completing the classes, colleagues must sign the ethics pledge and agree to comply with the ethical conduct principles. In 2018, 100% employee completed the training and signed an agreement to comply with the terms of the "Ethical Conduct Guidelines". In the future, we will regularly implement the program to ensure that employees continue to maintain a strong grasp of concepts and approaches to ethical conduct.

The importance of values also permeates Fubon’s evaluation system. Not only evaluations of the Board of Directors and its members that assess their support for the Company’s core values to evaluations but all Fubon employees have criteria related to "integrity". Fubon employees’ individual evaluations include "internal audit and control indicators" that look at "annual compliance evaluation" and "annual special audit" results and whether an employee has violated internal control, compliance or operational risk rules. The Company will remain firmly committed to deepening the roots of ethical management concepts in all areas of the organization and promoting Fubon’s sustainable development.

In order to strengthen employee compliance and respect for the process of business practice to comply with the Company’s internal control system, the Company has formulated the "Employee Oversight Management Guidelines" and the "Internal Control Violation Accountability and Punishment Guidelines" to define oversights, assign accountability, establish authority, and issue penalties, implementing risk management into the work of employees, leading them to pay attention to risk prevention for transactions and administrative business.

3. Whistleblower Mechanism

Fubon Financial Holdings has a trustworthy and effective whistleblower mechanism to ensure legal compliance and risk detection. It also shows how the Company values ethical management. In order to fully implement the whistleblower mechanism, the Company has set up multiple reporting channels, all with special personnel assigned to process complaints.

Internally, the Company has established the "Ethical Management Procedure and Behavioral Guidelines" with clear encouragements for internal personnel to follow and report dishonest or inappropriate conduct; There is also the "Employee Complaint and Handling Guidelines". Employees can use the internal employee mailbox to give feedback about the company system, employee benefits, internal control mechanisms, improvements made to risk management procedures, or report unlawful behavior. These complaints are all handled by special personnel who will categorize and process them by order of importance. Relevant regulations clearly stipulate that the person who made the complaint and the personnel handling the case must keep things confidential to establish the fairness and credibility of the whistleblower system. All 2018 complaints were processed according to these guidelines.

Externally, the Company’s official website includes the "Independent Director Mailbox" and "Complaint Mailbox" pages. Investors, clients, and other stakeholders can use the phone, email, or fax to communicate or report misconduct. These complaints will be processed by special personnel in accordance with internal procedures. In addition, the Board of Directors of Fubon Financial Holdings passed the "Whistleblowing Policy" in August, 2018, clearly stipulating that anyone who discovers that managers or employees of the Company or its subsidiaries have committed a crime, cheated, or broke the law can report it to the "Compliance Department of the Company's Compliance and Legal Affairs Division" through the "report mailbox" on the official website.

The "Whistleblowing Policy” stipulates that after a complaint is received, excluding cases that are not accepted or transferred, the President should evaluate the situation of the report and appoint a unit or assign at least three people to form an independent investigation committee to investigate the matter. The investigation unit should present a report of their findings within the allotted time limit. After the findings have been approved by authorizing units/personnel, the investigation unit shall notify the whistleblower of the results.

Also, from the moment the complaint was received, any person involved in or aware of the reported case must keep the relevant information of the case, the person being accused, and the identity of the whistleblower confidential. Violators will be penalized according to the Company's internal regulations. The Company and its subsidiaries must not dismiss, relieve of duty, demote, impose salary cuts, take away benefits entitled under laws, contracts or customary practices, or impose adverse treatments of any kind on whistleblowers because of the reports they filed.

In 2018, the Company and subsidiaries received a total of three complaints in the report mailbox, none of which concerned corruption or lack of ethics. The complaints were mainly about business service disputes or optimization of operating procedures. Those reported have been notified of relevant matters.

Communication Channels for Stakeholders or Whistleblowers