Compliance management in the financial services sector has fallen short over the last few years. Although the spotlight was shone on the industry with the 2019 Royal Commission report, leaders have struggled to meet their regulatory obligations since. In TAS’ recently released Compliance Index – now in its fourth edition – we explore the current state of play and identify the barriers to effective management.
The Index surveyed a cross-section of leaders across financial services to understand their perspective on the changing landscape and its implications for compliance strategies.
A key area where enterprises have fallen short is in their efforts to create a compliance-first culture. A thriving compliance-centric culture requires two main themes: encouragement and enablement. People must be familiar with both their own and their company’s obligations, as well as be able to meet those obligations through with access to the right tools.
However, alarmingly, over 50 per cent of firms use Microsoft Excel as their primary or only tool for compliance management. The fact that they are not using fit-for-purpose tools raises concerns around the efficiency and sustainability of management protocols and an underappreciation for the purpose-built tools that exist in the market. Further, 8 per cent of organisations run no training at all, choosing instead to have basic awareness activities only.
Companies still have a lot of work to do to get their teams ready for a compliance-first culture. But first, there should be a fundamental shift in how compliance is viewed throughout the organisation, ensuring that every member of every team takes ownership and responsibility where required.
Here are three ways leaders can ensure their team is ready to support comprehensive compliance management:
Develop the right culture. Historically, compliance was the sole responsibility of compliance officers. It is now vital for the whole organisation to observe risk management in daily operations. Leaders must demonstrate this from the top-down and ensure that compliance activities are written clearly into roles so that employees have visibility and knowledge over the areas they manage.
Implement change systematically. Getting people on board will be a significant change and will require both transformative leadership and strong implementation. Start your journey with a clear road map that demonstrates how you will reach those objectives while increasing the value for your employees. Connect the action to the ‘why’ for your people to be invested in the process and work proactively towards effective compliance management.
Train with the people in mind. Always approach training strategically. As Julian Fenwick, Founding Director of the RegTech Association, discusses in the Index, we should consider employees as the end-users of a compliance training program. Understand their level of skill, prior learning and ongoing needs and develop a customised training approach. Leaders can then innovate the delivery for better engagement, offer multi-model options and even enable mobile training.
Investment in training and tools takes time and resources. However, as previously discussed in this series, there are ways to mitigate those costs. RegTech solutions offer automation on processes and actionable insights to enhance compliance efforts. And Cloud/SaaS software will help manage the security and workflow more effectively between clients and even departments.
Learn more in the fourth edition of the TAS Compliance Index here.