DIY not always simple for compliance

RICHARD RATTUE Managing Director, Compli-Serve

The financial services industry is changing rapidly – from the impact of technology (and, subsequently, FinTech and RegTech becoming more commonplace), to the overhaul of the industry through COFI coming in, the potential impact of the RDR and a general move away from simply ticking boxes.

Financial advisory practices face a myriad of compliance requirements in addition to the various financial legislations governing their businesses (or those still to come). Being confronted with a list of different deadlines, reporting requirements, as well as a host of administrative obligations, can be overwhelming to manage.

For smaller practices, or those consisting of a single key individual, staying compliant can be very challenging. On any given day, it can be demanding to make time to see numerous clients, run the business operationally, and make enough money to keep the doors open, let alone tackle reams of compliance requirements.

Should you DIY?

Being tempted to keep administrative costs down by trying to do compliance yourself does present some danger, particularly as big changes are ahead in the industry. If something slips through the cracks, the financial impact on your business could be detrimental, with costly fines that the FSCA could levy on your business for non-fulfilment of an obligation imposed by law.

To be aware of new and ever-changing legislation, as well as understanding the impact of any changes, is onerous on a small business. Missing updated amendments or conduct standards places a business at risk, where in the worst-case scenario, your licence could be lost. Receiving penalties also puts your reputation at risk through negative publicity – all of which could easily be avoided by seeking professional compliance support.

Peace of mind meets professionalism

Making use of an external compliance practice could address the compliance responsibilities businesses face. Compliance officers are professionals equipped to focus on what needs to be done to stay compliant; they should be aware of all the pertinent reporting obligations and due dates, and endeavour to ensure they, and their clients, are informed on relevant industry and legislative changes.

There are of course numerous aspects to running a business successfully over and above staying compliant – from adequate IT and data solutions, to sufficient insurance cover and working capital. But with so many elements to consider in financial services regulation, having a strong compliance resource and support in place can certainly help to remove some business risk and stress.