CREATING AND SUSTAINING CULTURES OF COMPLIANCE
For many companies, maintaining compliance is a challenge. The pace of regulatory change, particularly since the financial crisis, has been ferocious. Companies have been forced to rethink their compliance frameworks to avoid enforcement actions, including financial penalties. According to Quinlan and Associates, regulators in the US and Europe have imposed $342bn of fines on banks for malfeasance since 2009, for example.
Given the financial consequences of non-compliance, companies need to prioritise their efforts to create a culture of compliance. This means establishing a basis of behaviour, integrity and accountability across the organisation, which, in turn fosters employee and client trust and confidence. Doing so is not easy, however, particularly for large multinationals where a ‘global’ culture can be hard to build.
Evolution of compliance
Today, many business leaders are awake to the value of compliance. The financial and reputational case is strong. There are also recruitment and staff retention advantages. Organisations that prioritise a culture of compliance may perform better and protect their reputation, both internally with employees and externally with customers and partners.
As a result, organisations are spending billions every year to meet their compliance obligations. According to Deloitte, compared to pre-financial crisis spending levels, operating costs spent on compliance have increased by over 60 percent for retail and corporate banks, for example.
Arguably the most important aspect of any compliance effort is the influence exerted by the company’s senior leaders. “Ultimately, the C-suite is responsible for compliance,” says Theodore L. Banks, a partner at Scharf Banks Marmor LLC.
Jan-Mar 2020 Issue
Richard Summerfield