25 Oct 2018
As someone who has been in the financial services compliance sector for a long time, I am often asked “What advice would you give to staff who are new to the compliance team?”
Well, there are many aspects to consider in such a response.
Firstly, compliance staff need to understand the financial products that their firm offers to customers. So it’s good for one to ask themselves questions like: ‘What are the particular features of the products that are attractive to customers?’, ‘Which type of customers are the products offered to?’
Conversely, one may also ask, ‘Which type of customers should not use these products?’, ‘What are the risks to the customers in purchasing these products?’ and ‘How do the products generate any economic return both to the customers and to the firm?’
New compliance staff should be able to provide credible answers to these questions before they can address any regulatory or compliance issues associated with the products.
Secondly, once new staff understand their firm’s products, they should learn about the relevant regulatory and legal issues associated with those products, as well as how the regulatory system operates in the UK.
I am a great believer in taking examinations offered by the Chartered Institute of Securities & Investment and other such bodies, in both regulatory matters and product classes.
Such exams provide a credible demonstration of an individual’s knowledge at a point of time that new employers may find attractive. More importantly, passing the exams should give staff the confidence to address new problems which they will inevitably face in their daily work.
Thirdly, I am not a fan of attending commercial industry conferences, not least as very few of them offer value for money, in my opinion.
My test of a good conference is whether or not I learn three things that will help me do my job better as soon as I get back into the office, not in six or twelve months time when a new law or regulation takes effect. I have found that very few conferences meet my benchmark.
Fourthly, in contrast, I prefer to access the free client newsletters and seminars provided by many law firms.
I encourage staff to sign up to the many relevant publications produced by the lawyers, who also offer briefings on a variety of regulatory topics at breakfast, lunchtime and evening sessions.
This is a cost efficient way of keeping up to date with new compliance topics and issues. An additional benefit to attending such events is that new staff will meet colleagues from other firms who are doing similar jobs and who face similar issues on a regular basis and therefore may be able to offer credible suggestions to resolve issues in the future, if requested to do so.
Fifthly, it is important to recognise that Front Office staff, such as traders and relationship managers, will usually know far more about the products and markets than any compliance staff member will.
Accordingly, I recommend that compliance staff, when they do not understand a product, approach Front Office staff, by saying “As I do not understand this product, can you please explain how it works to me?”
By adopting such a posture, I have found, the staff member will gain far more respect from his/her colleague, rather than trying to bluff their way through a conversation with someone who knows far more about the product than any compliance team member will do.
Sixthly, compliance staff must be prepared to question everything they are told. I call this attribute as exercising “professional scepticism”.
Compliance staff will come across many colleagues within their firms who will tell compliance staff things they think such staff want to hear.
On rare occasions, staff may seek to mislead compliance colleagues, while at other times, staff will speak with compliance colleagues without a full understanding of the matter at hand and thus, inadvertently, may provide an incorrect response to any given question. The ability to sort the “wheat from the chaff” is critical to being good compliance officer.
Finally, I recommend that compliance staff join industry groups, associations and committees. Through these bodies, staff will soon develop a network of colleagues across a number of firms.
This network may be helpful when seeking an answer to a particular problem or when seeking a new compliance role.
It is also likely that through these bodies, staff members will be able to participate in round table meetings with regulators and supervisors to discuss such items as matters of common interest and new regulatory proposals, both of which should increase a compliance team member’s understanding of current regulatory topics.
The ability to provide input to industry responses to new regulatory proposals is another advantage to participating in these bodies.
In conclusion, may I suggest that if a new member of a compliance team follows my advice they will have a long and successful career in compliance?
About the author: UK-based Denis O’Connor is both a Fellow of the Institute of Chartered Accountants in England & Wales and the Chartered Institute of Securities and Investment. He was a member of the British Bankers’ Association Money Laundering Committee from 2003 -10; and a member of the JMLSG’s Board and Editorial Panel between 2010 and 2016. He has been a frequent speaker at industry conferences on financial crime issues, both in the UK and abroad.
This article is expressing personal opinions and is meant for information purposes only. The article does not intend to replace professional or legal advice. It is recommended that readers seek independent professional or legal advice, or speak to authorised persons/organisations.
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