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Compliance culture

While not necessarily immediately obvious, everyone in financial services needs a compliance culture to meet the expectations of the regulatory environment now in place, even while noting it is being developed further to capture conduct concepts.

Further, Boards and management often have their own additional internal requirements that are expected to be met. Regardless of size, all businesses need compliance culture in place, even if that simply means ‘ensuring that things are done the way we decided to get them done’. A good friend, who is also a business coach, puts it this way: ‘never put in place a rule you aren’t prepared to enforce’. New law and regulation ask us to put in place rules and policies – so we must have a way of forcing ourselves and others working in the business to observe them.

The customer-focused nature of most governance requirements means that the implementation of a compliance culture ensures that you focus on them. If we take a look at financial adviser businesses, they deal with risk, may handle client money, and now have new requirements to abide by, it is evident that a compliance culture necessary to have in place to ensure that regulator’s expectations are met.

How do you build a compliance culture?

  1. Start with a whole of business approach – Compliance needs to be a focus from the Board down through management and on to the individual workers at all levels.
  2. Commence with an emphasis on higher risk business operations – Identify those risks with the greatest probability of occurrence and/or the potential to have the greatest impact, and concentrate management and mitigation on those risks
  3. Build from your core activities: if you give advice, advice process is the heart of your operations.
  4. Learn – read the guides, laws, contracts, and regulations that together form the sum of the commitments that your business must meet.
  5. Challenge yourself: what level of risk, in financial terms is unacceptable to you? If a dollar loss of $100,000 is unacceptable, you will need to eliminate the risk of that happening.
  6. Fraud is real, people can be very self-interested: ask yourself – if someone else was doing your job, how to you think they could rip off the company, your suppliers, and your clients?

If you want to know more about how to test whether your culture is supportive of compliance, make contact with one of the team.


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