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Best Practice and Delivering Value – The Future for Compliance

Best practice Compliance

A frequently asked question by Compliance Directors and other members of senior management:

“How does our Compliance Department compare with best practice?”

Any answer to such a question points out that all Compliance Departments are as different as the financial services organisations in which they operate. That said, those Compliance Departments which can justifiably claim to be proponents of best practice manage to combine and blend four ‘aspects’ of operation with eight essential ‘ingredients’ into a formula that enables them to contribute and deliver to meeting the overall business objectives.2

Key functions

The four aspects of operation are:

Demonstrating Compliance with relevant regulations

“Good administration and good compliance with regulatory requirements is also good business. It is what customers expect, first and foremost, but it will also keep firms out of regulatory trouble.”

Sir Howard Davies, FSA Chairman3

Embedding Compliance within their organisation

Managing the cost of Compliance; and

Identifying, addressing and resolving regulatory failures

Aspirational Compliance Directors have indicated that they generally spend too much time on the first and last of these aspects, whereas they would like to be focusing their efforts and resources on the middle two.

Most also recognise that by directing their efforts and resources towards embedding compliance and managing the associated costs within their organisations that they will, in all likelihood, reduce the need to spend time on the first and last aspects.

The dichotomy, however, that Compliance Directors face is how to deploy their resources in such a way as to ensure that all four aspects of operation are simultaneously managed while at the same time shifting the emphasis to the middle two.

2 We found that although other functions and ingredients have been suggested to us, they are usually just subsets of these items, therefore we have limited them to twelve in all.

3 London Human Resource Group Conference, June 2001, London.



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