A new infographic from Thomson Reuters explores the idea of a compliance culture – what it means, why you need it and how you can achieve it.
This is a theme we’ve explored before, most recently in our blog on how firms can use psychology to create cultures of compliance.
The infographic provides a neat way of visualising what is meant by and required in a compliant organisation. Available on the company’s website, it states that:
“a culture of compliance goes beyond once-a-year mandated training, it embeds compliance into everyday workflow and sets the foundation and expectations for individual behavior across an organization”
The costs of non-compliance
The financial penalties for regulatory breaches are all too clear, as the figures below show. Alongside these global statistics, it is estimated that misconduct has cost the UK banking sector more than £53bn in fines in the 15 years to 2016.
Source: Thomson Reuters
The benefits of a good governance ethos are therefore evident.
But how can you achieve this?
Six steps towards a culture of compliance
The infographic sets out six clear areas where firms should focus. Achieving this inbuilt ethical approach requires:
Understanding what’s required of you is the first step. You cannot comply with regulations and expectations if you don’t fully understand them. Regulatory practitioners need to know deadlines, requirements and anything new coming down the regulatory pipeline.
The FCA’s speeches and publications are a good source of insight into its priorities. Read our blog on the Authority’s views about what makes good conduct regulation and find out more about its 2017 business plan and future mission – they will all give you a good idea of its areas of focus.
An ethical ethos needs to come from the very top of your organisation, with clear communications on what is expected. Transparency and clear messages around conduct are vital – whereas a lack of transparency is identified as one of the red flags that indicate a poor corporate culture.
Ongoing regulatory training ensures that everyone is fully up to speed with the latest requirements. Make sure your team is aware of their ever-growing responsibilities. Our whitepaper on The changing role of the Compliance Officer has more on this.
4. Effective technology
Whether it’s technology to support training and education or automated processes that help to mandate compliant approaches, there are ways to harness technology for improved governance. Look at how you can use the tools available to help you reduce regulatory breaches.
Make sure your approaches to pay and reward reflect the behaviours you want to see. This is something the FCA has returned to time and again in its speeches, like this one given last summer. And in a blog last year we looked at whether a reported decline in the trend for high bonuses was linked to the desire not to reward potentially unethical practices.
6. Incident reporting and case management
Having clear processes for reporting any transgressions or errors is essential, as is a strong process for record-keeping. Honesty and transparency is key: being aware of breaches is the first step in addressing any shortfalls and mitigating risk.
These six steps are an excellent summary of what it takes to deliver on an ethos of strong governance.
You can read more about the practical steps you need to take to achieve this in our whitepaper on How to embed a compliance culture into your business, which you can download for free here.