In my last article I introduced you to financial services’ best-kept secret: the BS 8453 Compliance framework for regulated financial services firms, which was developed in 2011 with the sole intention of establishing a professional framework for an effective compliance management system.
So, almost a decade on, what impact have we seen? Well, in that time we have seen significant changes to both the educational and operational environments in which advisers and planners work; we have also seen huge changes to the skills, abilities and approaches needed by those holding compliance responsibilities.
For many firms, the job of quality gatekeeper and of controlling compliance is still that of the practice principal, or the most senior financial adviser or planner.
The sector has spent decades firefighting these regulatory changes, in some cases with devastating impacts. We believe this is about to change.
However, as the extensive demands on these roles increase, there simply won’t be enough brainpower or energy for people to fulfil the compliance function to the level needed – never mind having enough time and mental space to spot the potential changes and challenges ahead.
The sector has spent decades firefighting these regulatory changes, in some cases with devastating impacts. We believe this is about to change.
Over the last 10 years we have seen the rise in profile of many other roles within the sector. Paraplanners are the most obvious ones, with their natural technical, detailed and meticulous approach to getting the job done – but also Business Managers, the hybrid role between business owner and the old-style office manager.
And here lies the untapped opportunity within compliance.
More and more we’re seeing the appointment of Compliance Managers, Technical Managers and (probably more importantly) Quality Managers. On the face of it, these seem no different to those who have come before, but after a closer look it seems they do in fact approach the best practice elements of compliance oversight very differently indeed.
The responsibilities of the role are vast, but the key differentiator lies in the DNA of the role-holder themselves.
Alert: The role-holder must demonstrate a keen interest in the role and in the financial services sector as a whole, and must remain alert to the needs of the client and the organisation at all times.
Curious: The role-holder must demonstrate a continued desire to expand their knowledge and understanding of the client’s needs and requirements, as well as of the financial services sector as a whole.
Responsive: The role-holder must remain responsive to and supportive of the client’s needs and requirements at all times, while having the authority and autonomy to confidently put forward their own ideas and opinions. A note here – the client’s needs means those of both the external client and the internal business and team.
Resourceful: The role-holder must strive to work as efficiently and effectively as possible at all times, while maintaining the highest standards of professionalism and levels of confidentiality.
Compliance Managers, Technical Managers and Quality Managers often sit internally within the team, bringing the much-needed hands-on, real-time support which is often lost when the function is outsourced.
Plus, sadly, many who currently perform these roles have a very different outlook; many have a somewhat fearful attitude and a reactive approach to every task they face.
However, we believe that a different approach is needed, and there has never been a better time to embrace that approach.
BS 8453 outlines two key elements where this change is needed:
Independence: The compliance function shall be able to demonstrate independence: both independence to act, inspect records, challenge and report, and independence from the business it monitors. In particular, the method of determining remuneration of those involved in the compliance function shall not compromise their objectivity or be likely to do so.
Authority: The compliance function shall have sufficient authority from the governing body to allow it to fulfil its responsibilities effectively.
Only when both of these aspects of the standard are met can the compliance function be well positioned to be ready to embrace its remit and put quality firmly at the heart of everything.
