When times of economic downturn arise, regulatory bodies, such as the Securities and exchange Commission (SEC) and Financial Conduct Authority (FCA) take it upon themselves to address the crux of the issue, introducing new regulations which better protect consumers and the market as a whole. How do we know this? Historical evidence.
- The Great Depression resulted in the Investment Adviser’s Act of 1940.
- The Great Recession result in the Dodd-Frank Act.
What does this mean for investment advisers and other financial firms regulated by such bodies? While firms might be inclined to tighten their proverbial belt in times of economic crisis, when it comes to your compliance program, proactively addressing regulatory changes and continuing to actively manage your program is the only technique to avoiding the potentially detrimental impact of noncompliance.
Tactics to manage your firm’s regulatory compliance program even when budgets are tight
We get it, budgets are tight. And now more than ever, in times of economic uncertainty, it can be easy to slash spend and save where possible. However, with the right tactics, you can remain on top of your compliance game and avoid costly fines down the line for your financial services firm.
1.Educating your employees
Your employees are your first line of defense and one of the most critical components to your compliance program. Make sure they understand your policies and procedures, and the role they play in protecting your firm from risk and avoiding fines and penalties. Creating a strong culture of compliance through employee education can include:
- Holding monthly lunch and learns to keep the entire financial firm informed of any new regulations, updates to policies and critical matters.
- Sending out regular updates on important and topical compliance matters.
- Contextualizing why compliance matters and how you are mitigating risk for your firm.
2. Staying on top of regulatory industry trends
You can’t comply if you don’t know the applicable regulations. Leverage free resources like webinars, articles and guides to stay in the know on compliance update which could significantly impact your firm.
3. Investing in or optimizing your compliance technology
This one may seem counterintuitive, however, with the right technology automating your processes, your compliance team can be freed to focus on bigger picture priorities like those listed above. Plus, working with the right technology partner means your financial firm can integrate the right solution to match your needs and your firm’s budget.
4. Leaning on outside compliance expertise
Regulatory compliance consultants are experts in their field, often bringing with them decades of experience as regulators and chief compliance officers themselves. An asset which can be especially helpful in times of significant regulatory upheaval, like we’ve seen in the last year. Bringing in outside expertise when you need it most can help you preserve funds, while continuing to address the most critical compliance matters.
5. Leveraging outsourced services
While we wouldn’t recommend outsourcing your CCO functionality, firms can take advantage of outsourced services to manage day-to-day compliance tasks which eat up valuable time and resources. Such tasks could include data management, system configuration and optimization or report generation. By leveraging resources like ComplySci’s Managed Services, firms can yield higher returns from their technology investment and ensure they are prepared for whatever compliance challenge comes next, without having to invest in additional headcount.
Regulatory requirements do not simply shut down with an economic downturn. By staying on top of your regulatory compliance program and leaning into your resources, you can help protect your firm from the risks of noncompliance and the steep penalties faced for breaching SEC and FCA regulations. Learn more about the ComplySci’s suite of solutions and how we can help your firm mitigate risk and remain in compliance.