In the last eight years a surge of new regulations has emerged across the Global Financial Sector, as has been seen with the introduction of legislation such as the 2010 Foreign Account Tax Compliance Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, and the impending enhanced cross border scrutiny and controls that will accompany the European Union’s Regulation on Markets in Financial Instruments (MiFIR).
Increasing Compliance Burdens
The growth of Regulatory and Statutory Compliance burdens can be seen to be continuing to develop at pace, as seen with the introduction of the Persons of Significant Control regarding certain UK corporate entities and the impending arrival in 2018 of the Third Basel Accords.
Consequently, Corporate Transparency has become a central aim of states and financial regulators across the world, with the costs of regulatory adherence costing major financial institutions such as the largest six US banks $70.2 billion in 2013.
“The Age of the Compliance Officer”
This barrage of new rules and regulations has subsequently resulted in the proclamation that the age of the Compliance Officer has now arrived within Global Business.
The importance of Regulatory Compliance and the demands that expanding legislation places on Companies means that investment and regulatory awareness is now at the forefront of corporations, with effective Compliance Management being an essential component in cost reductions that ensure maximum wealth creation.
While it remains obvious that Regulatory Compliance and Governance is not optional, one of the primary motivations for ensuring compliance is the avoidance of big fines or penalties, as well as the significant reputational harm that may be incurred by breaching regulatory requirements.
Effective Governance and Compliance can also lend itself to enhancing business processes and assist with optimising the business decision process.
The adequate investment of resources within effective and well-designed governance and compliance functions in Companies can prevent delays and unanticipated cost in implementing new corporate objectives and thus preventing organisational paralysis.
Subsequently, advance compliance and governance processes and models can ultimately help organisations move faster and more confidently while also reducing bureaucratic costs.
Increased Employee Morale
In addition to these operational benefits, well instituted compliance and governance programs can also have overlooked positive effects on employee morale, as the reputation of the Company can directly impact upon employee attitudes.
Firms that place an additional onus on their compliance and governance requirements in light of these reputational and cultural effects, often benefit from attracting high quality and principled employees, and also regularly generate enhanced productivity due to high employee morale that can also lead to reduced attrition rates.
The effect that efficient compliance and governance protocols can have on a business’s reputation and brand is not only apparent amongst employees.
Improved Business Opportunities
Ensuring that a Company has the correct investments in compliance and governance systems that ensure the good name of the Company is maintained can also play a key role in Corporations being able to secure agreements with suppliers and partners on more favourable terms and seize upon certain business opportunities.
While ensuring regulatory compliance is a mandated requirement of any corporate entity, opportunities for more effective and streamlined organisations do exist within significant investments in effective governance and compliance operations.
Investing in Compliance
Subsequently not only does the institution of an advanced compliance and governance regime help mitigate against unwanted adverse scenarios for corporations, it can ultimately assist in creating an effective environment that can allow businesses to uncover some of the hidden rewards that may be achieved through enhanced compliance and governance investments.