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Best Practice and Delivering Value The Future for Compliance

Purism vs pragmatism

We have also seen the emergence of two types of Compliance Director: the puristand the pragmatist.

“Occasionally the business should be allowed to fail.”

A Purist April 2002

The purist sees his departments role as an audit and advisory function, and no more than that. His department exists primarily to monitor the regulatory environment in which his firm exists, and to advise management accordingly. He is happy to monitor on a sample basis his organisations activities in the context of that regulatory environment and provide analysis and advice, but the job of addressing his findings is outside his remit. His department does not exist to check fact finds or trades for quality, or to review investor complaints, or to remedy past mis-sales or trades; that is managements job.

The pragmatist on the other hand has a more flexible approach. Like the purist, this Compliance Officer accepts the role of regulatory monitor, adviser and auditor. But he is also happy to provide his organisation with a more pro-active level of support, in which his team will review the quality of sales on a day-to-day basis, handle and resolve complaints, remedy past mis-sales, and even go so far as to participate in the running of the sales force.

The distinction can perhaps best be illustrated thus:

“Protecting the good standing of the organisation and the integrity and reputation of the brand is paramount.”

A Pragmatist April 2002

Purism

  • Monitoring the regulatory environment (this is the puristor weathervanerole described above)

  • Drafting and issuing guidance to management on the regulatory requirements, including, where appropriate, assistance with designing processes and procedures, and advice on designing training material

  • Audits of operational activities, such as branch visits, or sample reviews of records relating to sales, recruitment and training, complaints, etc., with reports going to senior management

  • Mystery shopping

  • Routine monitoring of the quality of transactions, such as fact-find checking, sign-off on all regulatory advertisements and recruitment decisions, etc.

  • Handling regulatory complaints

  • Interviewing potential new recruits

  • Provision of training for authorised staff

  • Supervision of authorised staff

Pragmatism

10

PricewaterhouseCoopers

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