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Compliance holds a ‘seat at the table’ for today’s financial institutions

Though compliance risk management has always been a crucial issue to address for all buy side financial institutions, recent industry events have made its importance and relevance more critical than ever before, according to the results of a new study.

In its 2014 Compliance Risk Study, management consulting company Accenture surveyed approximately 100 banking and compliance officers at financial institutions in North America and parts of Europe. Based on their responses, the report came to several conclusions.

One of these findings is that compliance management systems vary. Not only that, but they’re different in terms of who the ultimate authority is as far as holding workers accountable. For example, just under 33 percent of respondents said that they reported to their board of directors about whether policies were being followed. Meanwhile, 40 percent said that they reported to the company’s CEO.

“A key next step for compliance is to gain the stature and authority to influence appropriate behaviors across the organization including responses to mandates from senior management or regulators where required,” according to the Compliance Risk Study. “This may not be easy to accomplish, as 60 percent of respondents still see a need for improvement in establishing a culture of compliance in their firms while 65 percent of respondents feel that they needed to improve their response to and relationship with regulators.”

More investment needed for compliance management
Another theme that emerged from the Accenture study is more investment is needed in compliance programs in order for financial firms to achieve their predetermined goals. Accenture noted that compliance programs of today are fairly new, as there are more hoops to jump through in order to establish rules are being followed. As a result of their “immaturity,” more work is required in order to make them more successful.

“These include the ability of programs to draw lessons from peers and industries with more advanced risk management capabilities,” the report stated.

It added that 88 percent of respondents from Europe and 94 percent from the U.S. considered this hallmark to be fundamental to a compliance program’s overall effectiveness.

This past October at the Data Governance Conference, which was hosted by Rimes Technologies and Investit, compliance was a key issue that was discussed throughout the event and proved to be a theme.

Andrew Knowles, head of compliance at RIMES, noted that compliance management is not something that can be pushed off until all the regulations are known. It has to be modified on an ongoing basis.

“Don’t wait for the final legislation to appear, or it will squeeze the timelines and lead to a lack of coordination,” said Knowles.

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