5 steps to creating a culture of compliance

Dec 6th '19

Blog last month on How to implement a culture of compliance proved really popular.


Creating compliant cultures is clearly still top of mind for many firms, with the need to embed an ethos of good governance never far from the priority list.


We’ve therefore decided to revisit the topic of compliant cultures.


Here, we expand on the themes of November’s blog to explore in more depth the five steps firms could start with if they truly want to create a culture of compliance.


Step 1: Make compliance built-in, not bolt-on

The first step is arguably also the most important. Compliance needs to be an intrinsic part of your processes, not something tacked on at the end.


Compliance with the demands of your regulatory environment should be considered at all stages; in product development; in designing your marketing and communications materials; and within the processes and procedures that make up the essence of your business.


For marketing compliance, this means ensuring the right review and approvals process takes place before financial promotions hit the market. It also means documenting this process accurately, so that you have the requisite FCA-standard audit trail.


In too many firms, compliance remains a box to tick, rather than an inbuilt part of your corporate DNA. Address this and you will be on your way to a more compliant corporate ethos.


Step 2: Create a collaborative environment

Related to this, it is important to remember that working together is vital to a compliant culture.


Too often, Marketing and Compliance teams can feel as if they are pulling in opposite directions – one the innovative enabler and the other putting a dampener on creative ideas.


In fact, compliance and creativity should not be viewed as mutually exclusive. Brand strategy and compliance are intrinsically linked – and remembering this is vital to a culture where compliance is central to the way everyone works.


Marketing and Compliance teams are, after all, working towards the same goal: effective, results-focused financial promotions that don’t risk regulatory breaches. If both teams can view the financial promotions process from the other’s perspective, they will be better able to work in harmony to produce a mutually agreeable end result.


Look at different ways to improve the way your teams collaborate and put them into action to help teams work effectively together.


Step 3: Make compliance everyone’s responsibility

If you want to successfully embed compliance into your firm’s culture, you need to make everyone accountable for it. This is in line with the FCA’s focus on increased personal accountability, as seen in regulations like the Senior Managers and Certification Regime.


Your compliance team cannot have sole responsibility for making your business compliant. Whether you’re looking at developing new products or producing the financial promotions that take them to market, people in all areas need to recognise their role in ensuring a compliance culture.


This holds true not just across teams, but also from top down in the organisation. Your board and senior leaders need to ‘walk the talk’ when it comes to good governance, showcasing the type of behaviour they want to see. Again, this is something the regulator has been keen to push in its communications.


Step 4: Encourage transparency and honesty

Honest communication is a must-have when it comes to creating an inbuilt compliant culture.


If there are any slip-ups or regulatory breaches, your employees should feel able to share them – before they potentially escalate into something more damaging. Learning from mistakes enables you to implement a culture of continuous improvement. Pushing them under the carpet denies you the opportunity to make positive changes.


Being frank about the reasons for compliance issues means they can be tackled – whether by improved processes, better training or maybe the introduction of some element of regtech or automation.


  1. Consider the interests of all your stakeholders equally

Compliance failings have been shown to occur in businesses where profits and shareholders’ interests have been prioritised over those of other stakeholders.


Doing this can create a culture where – although lip service is paid to compliance and on paper, systems, processes and people are highly compliant – in reality, people may be compelled to put sales above everything else. The wrong behaviours are incentivised and a blind eye is turned to poor governance.


If profits are prized above all other measures that employees are assessed against, your employees’ focus will mirror this. This is not usually good news for transparency and compliance.


Create a culture of compliance

Follow these five steps, and you will be on the way to a culture where compliance is intrinsic rather than an afterthought or an additional step to ‘layer over’ your usual practice.


Making compliance part of ‘business as usual’ vastly increases your chances that a compliant culture will be maintained and your processes, procedures and outputs will meet your regulatory obligations.


If you’re interested in reading more about creating compliant cultures, get in touch with us.


How can we help you?          

LS Consultancy has wealth of experience in reviewing financial promotions and can do so on a one-off or on an on-going basis.


We are also skilled in reviewing and assessing your financial promotion procedures and can assist you to establish the necessary framework to help future compliance with regulatory requirements.


Explore our full range today.


Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.