Organisation of compliance across financial institutions

Abstract

Purpose

Compliance is defined as conforming to a rule, such as a policy framework, standard or law. Regulatory compliance encompasses all processes that require an entity to be aware of and conform to relevant regulations. As a result, organisation of compliance function remains complex due to the overwhelming set of compliance requirements that exert pressure on various business segments. This report aims to investigate how banks and financial services firms are responding to the regulatory-driven changes to the current compliance landscape, with particular attention paid to nascent challenges and structural changes affecting the organisation of compliance.

Design/methodology/approach

The current research project is based on in-depth, semi-structured interviews with five universal banks and three financial services firms to pursue the best practices of adapting to the accelerating change in the regulatory-driven compliance landscape.

Findings

In the aftermath of the global financial crisis, banks and financial institutions across the globe have been required to adapt to numerous regulatory reforms that are exerting increased pressure on compliance functions. Amid recent events of multi-million fines to banks that displayed flawed surveillance systems and control failings, the changing regulatory landscape has shown that the relationship with the regulators and compliance with the new regulatory frameworks is a difficult process even for the tier-1 global banks.

Originality/value

Embarking on a peer review of the structures, roles, strategies and responsibilities of different compliance functions across banks and financial services institutions, this paper provides advice to financial institutions on ways of dealing with the complex emerging issues to ensure that the regulatory and compliance arrangements do not turn detrimental. At this point, the paper recognizes that the precise design of a compliance function will vary across individual banks and financial services firms. Nonetheless, this paper addresses the root issues and characteristics that are commonly shared despite the differences in organisations of compliance.

Citation

Prorokowski, L. and Prorokowski, H. (2014), "Organisation of compliance across financial institutions", Journal of Investment Compliance, Vol. 15 No. 1, pp. 65-76. https://doi.org/10.1108/JOIC-12-2013-0041