Compliance… not an event nor a ‘tick the box’ activity
FAnews recently spoke to Greg Brown, Divisional Director, Legal Information and Compliance, LexisNexis South Africa on the topic of compliance, and Richard Rattue, Managing Director of Compli-Serve SA on the top compliance tips for a winning 2020.
What will differentiate organisations
“Effective compliance risk management is crucial in today’s global market. This key business parameter, combined with a strong strategic foundation that has been enabled by compliance technology and employee talent, is what will differentiate organisations in the future ensuring their success or resulting in their failure,” says Brown.
“There is increased pressure on organisations due to globalisation, social media and enhanced consciousness of business and governmental actions, resulting in a demand for accountability and transparency. Remaining abreast of regulatory changes, while meeting customer, shareholder and other stakeholder expectations can be perceived as a burdensome and overwhelming task,” continues Brown.
“In a developing democracy such as South Africa, where ongoing regulatory changes can be expected, the added impact of technological innovation and access to information has led to statutory regulations growing in complexity. As a result, industries across the board have seen a significant impact on how they conduct business – and how they are regulated,” says Brown.
Failure to prioritise compliance
"There is a sense that compliance is becoming more important than ever, but it has always been important, particularly with technological advancements in this space,” says Rattue.
“While everyone is not on board yet, the PWC State of Compliance study supports the shift to use technology in compliance, its importance and the spend placed on development. Effective compliance risk management, strategy and skill are key in this regard, provided a tick-box approach is not taken,” continues Rattue.
“A well-coordinated compliance management system is critical for business efficiency and for meeting the requirements of a myriad of legislation in today’s fast paced, competitive and regulated environment. Failure to prioritise compliance and operational risk management will come at a high cost to entities. Included in these risks and costs are non-compliance penalties, escalating litigation costs, brand and reputational damage resulting in loss of public confidence and loss of revenue and staffing issues,” states Brown.
Sound compliance advice
“Firstly, embracing RegTech is crucial, where firms will have to invest in order to keep on trend, as well as to protect their best interests. Predictive technology can really assist in flagging issues, such as detecting an unhappy client and allowing firms to solve problems early. The positive insights gained from using technology are invaluable as well,” says Rattue.
“Secondly, get sound compliance advice. Most financial intermediaries simply do not have the time or the skills to build a risk-based compliance program and should seek guidance from those who can assist in this regard. Intermediaries need to be aware of what is happening in the industry with the current Retail Distribution Review (RDR) as a good example here. Times are indeed tough but cutting corners on your compliance program is ill advised,” states Rattue.
“Lastly, consider that just because the contract says you can do something, it does not mean you should. While fair treatment of customers is well-known already, it is always important to question what the right course of action is, irrespective of what a contract permits,” emphasizes Rattue.
“Compliance should not be seen as an event nor a ‘tick the box’ activity. Fresh thinking, new systems and innovative approaches are necessary to ensure that organisations are well positioned in the dynamic global marketplace,” says Brown.
“Implement appropriate and effective controls, performance indicators and reporting mechanisms into the core business processes of the organisation ensuring that all key regulatory, strategic and internal requirements are satisfied – without jeopardising the expected performance of the business. Integrating compliance into individual performance measurements and reward structures will result in organisation wide involvement,” continues Molefe.
“Leverage technology to automate data analytics and manage complexity, enabling real time compliance, monitoring, reporting and response. The volume of business activities that should be monitored within an organisation can easily overwhelm existing resources. Using technology such as key risk indicator dashboards, scenario modelling, predictive analytics and statistical analysis work hand in hand to provide management with trends and fact patterns and preventative control mechanisms,” emphasises Brown.
Plan for the future and automate
“Plot the vision and direction of your organisation and implement compliance systems that speak to those goals, now and in the foreseeable future. A proactive approach to compliance requires keeping an eye out for impending changes in the industry and in legislation to be able to implement the necessary regulatory requirements both timeously and effectively. Addressing imminent legislative changes such as the implementation of the Protection of Personal Information Act (POPIA) to protect the immense volume of client data should be a key focus of the financial services industry,” continues Brown.
“Accessing reliable and accurate insights and industry intelligence from a team of legal experts and product authors, via online platforms, reduces the time spent keeping abreast of regulatory changes, allowing practitioners to focus on growing their core business. Key functionalities such as the ability to select industry relevant alerts and data offer invaluable time saving prospects,” concludes Brown.
Writer’s Thoughts:
As Molefe mentioned, effective compliance risk management is crucial in today’s global market and is what will differentiate organisations in the future. Do you believe a coordinated compliance management system is crucial for business efficiency and for meeting the requirements of a myriad of legislation in today’s fast paced environment? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.
