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An end to “box-ticking” in compliance

Chrish Kaye

By Chris Kaye, CEO, co-comply

The compliance breaches at Barclays, HSBC and most recently Standard Chartered have aptly demonstrated the need for a new approach to compliance in the front office. In recent years, the ‘box-ticking’ method of delivering compliance training has proved ineffectual in safeguarding the assets under management and ultimately the corporate reputation of money managers. Commentators have identified the need for a different ‘compliance culture’ within investment management firms. In practical terms, this means one where training and assessment are given far higher priority in the front office and practices such as whistleblowing are actively encouraged. Firms must get the balance right between making money for the business and good governance. So how practical is it for front office staff to either be trained in compliance as part of their roles, or moved into compliance roles? Writes Chris Kaye, CEO of software vendor co-comply.

Regulatory and compliance training is a thankless task; a common perception is that employees are not interested and for the Compliance Team it is the last thing on the annual to-do list. But is this really true?Chrish Kaye

Employees do understand the importance of regulation and the need to be aware of it as part of their role; compliance professionals like nothing more than to debate and discuss the latest regulatory changes and the impact this will have. So what has gone wrong?

First of all, the reliance on the word training is too one-dimensional. Training is typically focused solely around new joiners, major regulatory change or repetitive training courses that are mandated by regulation (for example anti-money laundering). Outside of this, the only other time compliance engages with employees is the annual compliance attestation; asking employees to confirm that they have read the compliance manual, spotted any changes and fully understood it! This approach is too limited and what firms need to consider is a continuing cycle of raising awareness and building a culture of compliance.

Many employees will view compliance training as simply the firm discharging its regulatory liabilities rather than protecting the employees, and given the resources often available the Compliance Team probably feels the same way. This view is reinforced by the box-ticking nature of training and the ‘faceless’ annual attestation. In today’s information overloaded world, employees now need different tools and techniques to help reinforce knowledge and awareness. These could include:

a. The use of a ‘test-out’ approach to exempt employees from attending repetitive training sessions if they score above a certain mark. This approach can help create a competitive environment where employees do not want to be seen as having to attend training because they failed the assessment, and managers should be interested in why certain employees continue to leave their desks for training!

b. Using different communication and collaboration techniques to target and improve the dissemination of information so that it is relevant to the individual and their role within the firm. Targeted ‘tweets’ regarding regulatory change, or reinforcing existing policies and procedures will encourage employees to read and absorb. People remember information for longer if it is short, meaningful and presented to them two or three times via different channels.

c. Use online assessments to measure employee understanding of regulation and policy. Correlate areas of weakness from the assessment and use this to review and improve the compliance awareness and training approach, rather than just arguing that it is the employees’ fault if they do not understand. Assessments are also important in helping employees recall and remember information for longer.

And remember that the aim is to help protect the employee by raising awareness and building a culture of compliance, so engage with the employees. Run surveys to obtain feedback on how well compliance communicates and helps employees to understand; ask them what could be improved! And if nothing else, ensure that the firm’s policies are easily discoverable and appropriate to the individual’s role. 

Only through a blended approach to raising the awareness of employees to the regulations that affect them can this compliance culture be achieved. In this way, the compliance programme can change from a ‘push’ to a ‘pull’, where front office staff readily understand the need for and value of compliance.

 

 

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