Over the last few years, compliance has become highly visible in boardrooms across Australia. During this time, TAS has been at the forefront of monitoring the shifting landscape through our Compliance Index initiative.
The TAS Compliance Index canvasses the views of C-level executives and senior managers in banking, finance, insurance, superannuation and IT/technology for those industries. The Index takes a deep dive into the challenges and opportunities when it comes to compliance, and the key strategies and approaches leaders are adopting to manage it more effectively.
The latest edition outlines that the industry is yet to truly understand the changing expectations from regulators, or the significant business value in meeting those standards. The previous Compliance Index found that over 70 per cent of respondents viewed compliance as a crucial part of their business plans. Yet, in 2020, only 23 per cent of respondents reported having a clear grasp on their obligations. Further, approximately 1 in 3 leaders still question the value of compliance management.
From the responses collected in the Index, it appears that there is still the assumption that compliance responsibilities start and end with the Compliance Officer. Even where a compliance-first culture exists, leaders in senior positions still have a hard time grasping the importance of compliance within an organisation. Some of those surveyed view it as little more than a box-ticking exercise. However, now there is greater focus on financial compliance not only in the boardroom but in the homes of everyday Australians. As we enter a new decade, risk and compliance are centre stage, yet it appears that there is still work to do in moving the conversation forward.
Falling short on compliance management equates to falling short on customers’ expectations, as the 2019 Royal Commission report detailed. The report has led to a heightened awareness among customers of their rights and the necessity of adequate data protection by financial services providers. In the increasingly complex era of digital business, leaders that fail to redefine their compliance management strategies will be left behind by customers whose belief has been shaken.
So, the onus is on leaders to drive a mindset shift within their organisations and reshape the conversation internally around compliance obligations. Here are three ways to create a more compliance-positive culture at all levels:
Lead with a top-down approach. Creating a compliance-first culture starts with top-down commitment, where leaders take the initiative to understand the extent of their compliance obligations and encourage compliance-first thinking within the organisation. Leaders should promote a shift in thinking across the board and demonstrate how to take ownership of compliance at the individual level.
Empower people to get on board. Aside from an evolving compliance-positive culture, leaders should enable people to manage on their own effectively. This starts with providing the right tools and training – which has been a significant barrier in the past – to allow them to be more efficient and comply easier with standards. The right technology will vastly improve human function and help people adapt easier.
View compliance holistically. Compliance can no longer belong to just a single department or office. It has too many implications across multiple aspects of business functions to be ignored by the broader organisation. Employees at all levels of the organisation should be given the responsibility for management within their day-to-day activities.
Despite the growing awareness of compliance, there is still a long way to go before companies meet the current obligations effectively, and more importantly, leverage the value of compliance in creating a distinct competitive edge. There is an opportunity for the forward-thinking leader to utilise compliance commitments to develop strong relationships with customers amidst a volatile business landscape.
Get on the front foot. Learn more in the fourth edition of the TAS Compliance Index here.