New rules on individual accountability are increasing the challenges put before chief compliance officers (CCOs), in turn adding to what is already a complex and evolving role. That’s the view of business advisory firm Deloitte, outlined in more detail within the company’s new report entitled ‘The Changing Role of Compliance’.
CCOs are having to come to terms with the new Senior Managers Regime and the Senior Insurance Managers Regime, effective as of Q1 2016, which will be adding to the already lengthy list of expectations they must presently meet. The end result may see CCOs reporting more frequently and directly to the CEO.
David Strachan, head of Deloitte’s EMEA Centre for Regulatory Strategy, explained: “The cumulative effect of regulatory change is significant. For CCOs, taking on a great deal more in their day-to-day roles has become the norm.”
Deloitte’s report also points towards an increasingly ethical dimension around the issue of regulatory compliance, as well as the impact on both talent and technology resourcing.
Compliance is an issue for everyone in the company, not just the CCO. The reinforcement of accountability and clarity around individual obligations will lead to a significant change in culture and behaviour, suggests Deloitte, whereby staff are encouraged to take responsibility at all times for all actions.
An expanded CCO role will start to include, for example, the ability to apply behavioural economics to identify risks, acting as the adjudicator in ‘claw back’ cases and continual assessment of compliance and conduct risks in new technology.
As the CCO role encompasses a broader skill set, so demand will be higher for those professionals who can demonstrate expertise beyond traditional requirements.
The appetite for multi-talented compliance officers comes at a time when some companies are under increasing pressure to reduce costs in order to offset the effect of higher capital and liquidity requirements.
A ‘grow your own talent’ culture is likely to develop while future recruits could be sourced through the graduate route – individuals often perceived as being more receptive to new ways of working.
According to Deloitte, the correct technology roll-out will be a prerequisite for an effective compliance programme. Having the appropriate technology solutions in place and exploiting them will enable CCOs to improve the efficiency of compliance operations and expand their firms’ abilities to manage and monitor compliance risks.
Technology-supported analytics around compliance data will ultimately bring to the Board’s attention more relevant information on which to base compliance decision-making.
In conclusion, Strachan told Risk UK: “Until this point, many areas within the CCO’s remit fell into something of a ‘grey area’, but the new Senior Managers Regime will require absolute clarity. This will minimise any scope for uncertainty or misunderstanding around the boundaries of the CCO’s responsibilities.”