During a keynote speech at the Compliance Week 2014 conference, Securities and Exchange Commission Enforcement Director Andrew Ceresney provided some insight on what an empowered compliance function looks like. He also offered a four-question test that companies should ask themselves to determine the effectiveness of their compliance programs.
“Companies that have done well in avoiding significant regulatory issues typically have prioritized legal and compliance issues and developed a strong culture of compliance across their business lines,” said Ceresney. “I’ve found you can predict a lot about the likelihood of an enforcement action by asking a few simple questions about the role of the company’s legal and compliance requirements:
- Are legal and compliance personnel included in critical meetings?
- Are their views sought and followed?
- Do legal and compliance officers report to the CEO, and have significant visibility to the board?
- Are legal and compliance departments viewed as important partners in the business, and not simply as support functions, or a cost centre?”
“Far too often, the answer to these questions is ‘no’,” said Ceresney.
Considering Ceresney’s comments, are we surprised to hear that, of the 208 compliance officers who took part in the Deloitte & Compliance Week 2014 Compliance Trends Survey, only half of the respondents had a high degree of confidence in the metrics they were tracking?
We also read that nearly 20% of respondents were not confident that their IT systems captured and reported all compliance data necessary to get a good sense of the effectiveness of their monitoring programmes. Other trends also suggest that compliance is not getting the resources it needs to do its job well.
The demand for greater attention to ethics and compliance from regulators, business partners, investors and the board, has significantly increased, so the lack of additional resources seems somewhat out of step.
So what’s going on? The regulatory landscape is complex and poses substantial cost burdens. Complying with regulatory requirements is a top challenge for investment administration operations.
Effective data management is particularly crucial. This includes all of the related aspects of data management such as quality, timely delivery, analytics and reporting.
No matter what your size, implementing compliance programs that incorporate changes to organisational structure, functional alignment, processes, systems and data is crucial to empowering your compliance function.
As we navigate through the demands that new regulation is setting on the asset management community, it is quite clear the compliance function is a profession in transition embarking on a new set of values it can deliver to the organisation.
So what does PEA say… We say bolster up, compliance is here to add serious value and protect your organisation. As a firm, we whole heartedly support and encourage our compliance function as an important contribution to the success of our business and the continuity of our clients. The team has the freedom to act without fear of organisational backlash; sufficient resources to run the compliance function effectively; and access to the CEO and board to discuss ethics and compliance issues as the need arises.
We would be very happy to share how we have empowered our compliance team, feel free to call James in Guernsey or Peter in Denmark if you would be interested in hearing more:
James Orrick / +44 1481 730988 / firstname.lastname@example.org
Peter Toyberg / +45 70 20 40 61 / email@example.com