We welcomed over thirty Risk and Compliance professionals at the City of London Club on 22 September for a breakfast and networking seminar – ‘Compliance Challenges amidst Regulatory Changes’.
Geopolitical events are shaping the environment in which financial markets, organisations and consumers operate and are likely to continue. We are facing an energy crisis and a cost-of-living crisis. The sheer breadth of regulatory change is unrelenting. Compliance teams are pivotal in helping their firms navigate these changes while staying on course. How can Compliance optimise its impact on the firm?
Against this backdrop, the keynote session focused on how regulatory landscapes and stakeholder expectations are constantly evolving, why the role of Compliance has never been more critical to corporate success, and how Compliance teams need to flex and balance the multiple roles they play, including providing assurance, being a trusted strategic business advisor and an agent of change for culture and ethics, as well as understanding technology and analytics. The speaker also emphasised the importance of building relationships, aligning with stakeholder expectations, developing actionable risk guidance and providing comprehensive risk management coverage for Heads of Compliance.
The keynote speaker was Kemal Sahin (NED at GKFX UK, Trive Malta and Trive New York). He was joined in the panel discussion by:
– Kay Daniel (Head of Compliance & MLRO at Zeux)
– Nusrat Ghani (Head of Compliance, MLRO & DPO UK at Apex Group)
– Nish Patel (Global Risk & Compliance Lead at Rain)
The interactive panel discussions were chaired by Lindsey Domingo (Senior Director and Regulatory Compliance Lead at Xcina Consulting) and covered the following topics.
Regulatory and industry developments
As financial services and business strategies have changed and the environment diversified, the risks and opportunities that compliance functions have to monitor daily have also evolved. Compliance teams now need to come to terms with crypto assets, fintech, Artificial Intelligence, outsourcing and third-party risk management, operational resilience and cybersecurity, diversity and inclusion, and ESG, to name a few.
The panel discussed how Compliance teams keep up to date on regulatory and industry changes, some of the key regulatory changes which will be impacting them shortly (notably the Consumer Duty), and the impact of these various changes on Compliance team skillsets, headcount and budget.
Remote and hybrid working
In the wake of the pandemic, most organisations have had to switch to some form of working from home or hybrid working arrangement. The discussions addressed how this has been impacting the firm’s compliance posture and activities, notably monitoring. The impact on the Compliance team’s work-life balance, performance, productivity and career were also discussed.
Individual accountability / SM&CR
The Senior Managers & Certification Regime (SM&CR) was introduced in 2016 as part of the Regulators’ response to restore trust and confidence in the financial services industry through greater individual accountability and enhanced standards of personal conduct. The number of cases of enforcement action against senior managers and of conduct rule breach notifications has been relatively limited to date.
In the current market, there may be increasing friction between pressure on performance and remaining compliant, which can affect culture. The panel explored how SM&CR can be effectively deployed within firms. We also asked the panellists how they felt the regime impacted them personally as Senior Managers.
We conducted a brief poll of the participants in the room, which indicated that:
- The majority consider that SM&CR has been effective in improving the culture across financial services
- Personal accountability is making Compliance a less attractive career choice at senior levels (i.e. SMF16/17)
Digital transformation and new technologies
We discussed the impact of fintech, including crypto assets, on the business and the Compliance function. In fintech organisations, Compliance tends to have the opportunity to be very closely involved in business decisions and must acquire deep knowledge and understanding of the underlying technologies. Compliance must, however, maintain its independence as the second line of defence. Adopting Regtech has generally been beneficial for Compliance operations, although it is not a substitute for having a soundly designed process. The panellists emphasised the importance of developing a detailed understanding of functionality and use cases when making tool selections.
Final questions and concluding remarks
Our panellists recapped their top challenges for the year ahead, which can be succinctly summarised as having to deliver more with scarce or limited resources.
A final poll of the audience revealed that most participants expect compliance salaries and their firm’s compliance budget to increase over the next year.
Our next breakfast event will be held on Thursday 20 October at 08.30 on the topic of Operational Resilience, Outsourcing and Third-Party Risk Management.
If you missed any of our earlier events, further details are available here. To participate in our future discussions, stay up to date as we announce new dates and address wider topics by emailing us at firstname.lastname@example.org, or join our events guest list.