Compliance: from Bottom of the Pecking Order to the C-Suite

It has only been a few years since the function of Compliance within a financial services organisation has gained a seat at the C-Suite table. While having a Compliance Officer has been a regulated necessity for some time now, only recently has this role and their teams begun to provide value-add to their firms and are relied on from a strategic perspective.

That need has been driven by the fact that increasing levels of regulation globally and more challenging regulatory expectations are causing firms significant operational challenges when it comes to understanding, implementing and embedding new regulations and regulatory reform.  Understanding the regulatory impact, in particular, has become strategically critical at the senior management level.

Key findings gathered from research by Investit Insights for their paper “Coping with Regulation – Now and in the Future” June 2015 include:

  • 50 percent of firms centralise regulatory interpretation under the Chief Compliance Officer but still rely on other departments or outsource providers for support.  Programme Management is centralised for 58 percent of firms under the Chief Operations Officer, yet there is no standard structure for systems analysis and design, and only 33 percent of firms centralise regulatory reporting.
  • Many firms have implemented tactical solutions to ensure timely compliance with new regulations.  Although viewed as generally effective and reliable, 42 percent of firms question the scalability of the reporting solutions.
  • The expected increase in transaction reporting and need for improvements in oversight and controls are major factors impacting scalability.  As a result, 67 percent of firms are planning strategic solution to centralise regulatory reporting in the future.

Striking the right balance to address these challenges is not straightforward. Now, we are seeing a move from the operational need to ‘just get it done’ to inclusion in the long-term strategic visioning at a senior level, coupled with a renewed interest in investing in software for longer term support.

Written by Tom Pfister, Global Head of Regulatory Reporting Solutions and Nikki Lebrocq, Regulatory & Compliance Market Strategy at Confluence

Author: Dylan Jones

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