Is Compliance Only a Box Ticking Exercise?
Rutherford is proud to introduce its Leadership Series, a series of interviews with key players within the compliance, financial crime, legal and cyber security sectors. These informal conversations will serve as an opportunity for professionals in the financial and professional services industries to get insights on what topics are trending within their field.
Recently, when we sat down with a top Head of Compliance in the asset management world, we discussed the perception of the Compliance function within a financial services firm, and more importantly how it had traditionally been viewed as a simple box ticking exercise.
In the financial services world, often people forget that they operate in a regulated environment - they focus so much on the P&L that they lose sight of what they can or cannot do.
From your experience, how is the Compliance function viewed internally in financial services firms?
I think a lot of traditional asset managers tend to think about compliance as a tick box type of exercise. From my perspective, compliance is much more about engaging with the business to try and convey the importance of going about things in the right way.
What would you say to these people? What is your approach to railing against the box ticking mentality?
The reality is that there are going to be certain aspects of compliance roles within the industry that are more "tick box" than others. So in some ways, it can be appropriate.
But I also believe that thought leadership - particularly for a Compliance Officer that holds the SMF16 function - should not be a box ticking exercise in any way whatsoever. At that position, you must ensure that you are managing upwards, that you are providing guidance and advice to the business about setting expectations. But you also have to manage downwards by communicating what these expectations are.
At the end of the day, your typical CEO won't spend hours of their time reading literature from the FCA about culture and organisations - they have better things to do. It is the compliance department's responsibility to be able to interpret regulation in a way that suits the business, but also convey what the regulators' expectations are.
Do you believe educating members of staff can help address this?
Absolutely. I once worked for a small asset manager in a Head of Compliance capacity and realised early on that the team had never heard of compliance training. Part of my role was to help members of staff understand what it meant to work in a regulated environment.
In such businesses, people sometimes forget this crucial aspect, as they focus so much on the P&L and on how they can drive revenue. They tend to not think about the fact that they are in a regulated environment and that they won't necessarily be able to do whatever they want.