Embrace change, compliance officers told
Compliance professionals should embrace the changes affecting their discipline or miss the opportunity to contribute substantively to their organisations. This was the message from Harry Gill, Head of Compliance at Absa Capital at the recent 12th Annual Conference of the Compliance Institute of South Africa.
“The scope and breadth of compliance is changing and, along with it, the compliance professional’s role,” he said.
Since the global financial crisis, the speed and volume of regulatory change has increased significantly. In South Africa, over 600 government gazettes have been issued in the last six months alone, Gill said.
In addition, compliance professionals are faced with more principles-based regulations than before, such as the FSB’s Treating Customers Fairly programme for regulating the market conduct of financial services firms.
“Regulators are appreciating that a principles-based approach is the natural next step in regulatory regimes,” said Gill. “It means moving away from regulators dictating through detailed, prescriptive rules and increasingly focusing on desired outcomes. Then it’s up to management, guided by compliance, to take responsibility for aligning their objectives and processes appropriately.”
In a principles-based environment, compliance professionals are called on to ensure their companies are complying with both the spirit and the letter of regulations. This means acting as trusted advisers to management and not solely conducting monitoring and reporting, though these have their place. “You will have to challenge your existing processes and use of resources.”
It definitely means adopting a risk-based approach and thinking about the impact of your company’s actions on its reputation,” he said.
“Reputational risk has become just as important, if not more, than potential sanctions and fines. While it’s important to avoid fines and other sanctions, the negative impact of reputational damage is much more lasting and far-reaching.”
It comes down to ethics, he said. Compliance professionals, and management, should do the right thing as opposed to simply following the rules then using that as a convenient excuse for behaviour that is essentially unethical.
To be effective in the new environment, compliance professionals must understand their company’s business and get compliance on the agenda. “If you don’t understand your business you can’t apply the rules. And if you can’t get into the right meetings, you won’t be heard.”
Compliance is sometimes seen as holding a business back, but Gill said the role of the compliance officer is actually to help companies move forward. “Help management find solutions and streamline processes while still operating within the required regulatory framework.”
