The Role of the Compliance Officer

The Role of the Compliance Officer

1. Services to the Business

   • Enabler to business
     • Consultant
       • for strategic/operational developments
       • representation at key meetings/projects
       • work with business to formulate best practice procedures
         • meet needs of customers /business /regulator
       • ad hoc advice on regulatory matters & day to day issues
       • compliance not responsible for decisions made just outline risk/issues
     • Monitor
       • oversee that activities comply with regulation/legislation
       • monitoring programme
         • assurance to business
       • useful MI for business
         • influence decision making
       • identify process/controls weaknesses
         • insufficient/gold plated
       • risk based/themed like FCA approach
         • concentrate resources on key areas of concern
         • Event driven
           • LIBOR
         • issues & products
           • claims
           • conflicts
     • Communicator
       • internal issues
       • external events
         • changes to rules
           • consumer credit
           • so compliance must keep up to date with regs
             • help with process/policy changes
         • industry events
       • Regular briefings to snr mgmt
       • compliance should have internal communication processes in place
         • risk report
         • event escalation
       • development of relationships with business
         • improve culture
       • communicate with Regulator
         • Principle 11
     • Educator
       • Training to business
         • so less reliance on compliance day to day
       • support / oversight of other trainers to the business
   • Facilitator
     • Compliance culture / ethical behaviour
       • lead by example
       • Provide high quality service
       • demonstrate value
         • help firm achieve its ends
         • Feared is no value
       • TCF - 1 - central to corporate culture
         • Clive Adamson speech
   • Regulatory Compliance
     • SYSC - need systems & controls for compliance
       • high level rqmts
         • staff competent, appropriate knowledge
         • resources adequate
         • responsibilities & reporting lines clear
         • arrangements appropriate & effective
         • appropriate to firm- scale nature & complexity
         • independent of day to day activities
         • appropriate access to firm records
       • 2004 Fine Carr Shepards Crosthwaite
         • manual
         • monitoring
         • roles, responsibilities, reporting lines
     • CF10 - compliance oversight - designated investment business

2. FCA view

   • Snr Mgrs responsible for compliance
     • SYSC
     • FCA Principles of good regulation
       • Snr mgmt responsibility

3. Role

   • manage/mitigate compliance risk
   • may be outsourced but can't outsource responsibility

4. Key Roles in Function

   • Operational Team
     • conduct of business
     • ad hoc queries
     • help develop/implement policies
     • sign off fin proms
     • communicating changes in regs
   • Monitoring Team
     • desk based reviews
     • visits
   • AML Team
     • FCA strategic objective - integrity
     • AML 2007 rules dont apply to intermediaries but still FCA rqmts
     • SYSC requires sys & curls to counter risk of firm being used for fin crime
     • referrals to NCA
     • MLRO
       • where reg requirement must be CF11 - Money Laundering Reporting
   • Policy Development Team
     • identify/review/ interpret changes
     • respond to consultation papers
       • CP13/10 - Detailed proposals for the FCA regime for consumer credit (CP13/10)
     • consult with business on proposed changes
     • lead in managing relationship with regulator
   • Business Review Team
     • large firms - focus on quality of work
     • sampling work
   • Training & Competence Team
     • maintain records
   • Complaints & investigations
   • Project Teams
     • established for particular tasks
       • assess impact of consumer credit

5. Key Internal Relationships

   • Business Depts
     • sales
     • marketing
     • Finance
       • CASS
       • RMAR
   • Internal Audit
     • they help fulfil SYSC rqmts
     • compliance may trigger their work or vice versa
   • Legal
     • keep up to date with statutory instruments
     • relationships with other parties
     • Legal risk
   • Risk
     • firm risk appetite
     • Risk mgmt is in SYSC 7

6. Key External Relationships

   • The Regulator
     • Principle 11
       • keep supervisor updated
         • less likely to be intensively supervised
     • C1/C2 - more contact than others
     • Compliance Officer key relationship
     • good relationship helps when things go wrong
       • Abbey National 2005
       • early settlement discount
         • public interest
           • compensation sooner
           • reduced costs for firm & regulator
             • Principles of good regulation
         • 30%
           • Homserve
           • JP Morgan Chase bank would've been £196,586,000.

7. Compliance, culture & Ethics

   • Culture important for long term success
     • TCF 1 Compliance culture embedded
       • consumer protection is operational objective FCA
     • save mgmt time investigating/correcting errors
     • Products to market quicker - right first time
     • compliant reputation = business advantage
       • firms do due diligence before entering contracts with other firms
         • when clients are financial institutions - will know what is req'd
       • FCA public censures
         • FCA now announcing investigations
     • Must be outcomes based & complemented by ethical culture
       • Clive Adamson speech
       • follow the spirit of the regulations

8. Qualities of Compliance Professionals

   • outcomes based is subjective so need good judgement
     • Pre N2 rules based so needed good memory
     • spirit of the regulations
   • Influencing
     • facilitate & support not dictate
   • Business Acumen
     • Principles based - no clear answer
     • understand industry
     • compliance is there to help the business perform
   • Knowledge
     • rules
     • understand spirit of principles
     • up to date with regulatory initiatives
       • UK, Europe, World
         • FINMA
         • S. Africa
   • Interpersonal skills
     • Communication
       • build trust & positive relationships
   • Listening
     • find out what issues are
     • understand what business needs from you
     • speak to stakeholders
   • Decision making
     • tough decisions
       • proportionate & pragmatic