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The Future for Compliance Best Practice and Delivering Value

Effective Compliance monitoring

In order to be most effective, Compliance monitoring needs to be both preventativeand detective, focusing both on the controls to avoid failure QED and on those designed to isolate instances of failure where they are most likely to occur. The distinction between prevention and detection is, to our mind, a critical one, particularly in the retail environment where regulatory issues relate to human behaviour. We take:

  • detectionto mean any management activity which can identify potential breaches of the rules, but which in itself can do nothing to drive behaviour that is inherently compliant; it identifies weaknesses that have already occurred and is therefore related to the past.

  • preventionactively influences the customers experience, or the organisations adherence to regulatory requirements; it is related to the present.

Some examples of what we mean:

Prevention

Detection & Remediation

Timely quality assurance to ensure that only fit and proper individuals are recruited to the organisation

Post-recruitment reviews of recruitment records completed by Personnel to identify recruits who may not fit criteria

Induction training for new recruits Field-based coaching

Remedial training Post-sale fact find checking Complaints handling

Live observations of sales/ transactions (e.g. sales calls, monitoring of telephone conversations)

Desk-based monitoring of KPIs Mystery shopping

Desk-based monitoring of KPIs Mystery shopping Reviews of past business

It can of course be argued that detective measures can also be preventative, in that detection of a smaller problem can prevent a bigger problem from developing. The classic example is the implementation of the risk- based monitoring approaches adopted by most if not all Compliance Departments. These generally consist of some form of desk-based monitoring of a set of Key Performance Indicators (KPIs) designed to identify suspicious trends or transactions; Compliance scrutiny is turned upon those areas which have warning signs attached to them.

PricewaterhouseCoopers

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