Who fancies a fascinating chat about Compliance?

Posted by / January 17th, 2017 / No responses

Unfortunately, in our line of work, we have to educate and help our clients with the more boring and mundane side of business. It’s a tough job but someone has to do it, otherwise you lot are going to end up in a whole heap of trouble.

Compliance is just one of those topics. I have noticed at business events that if I tell new contacts that “I help my clients with contracts and compliance” – their eyes glaze over and they actively search for an escape route whilst saying “really, how fascinating…“.

The issue of compliance has become a hot topic and it is extremely important and critical to the ongoing success of a growing business. In light of the large number of corporate scandals in recent years there is an ever-increasing amount of regulations which businesses need to be aware of, and in larger organisations it is a boardroom priority to invest heavily in compliance in order to avoid coming under an unwelcome magnifying glass.

Effects of non-compliance

A recent Thomson Reuters report “The Rising Cost of Non-Compliance”  showed that total fines levied by the UK Financial Services Authority jumped to £474 million in 2013, up from £26 million in 2008. The pressure is on senior managers to become savvy with compliance issues. The effects of non-compliance can be serious and expensive : monetary fines, reputational damage, impact on share price, increased operational risks, personal liability for senior managers (including criminal convictions) and the curtailment of product lines.

Have I got your attention yet?

I hope so – because as a small to medium sized business, you need to be on the ball with compliance as it is one of the nasty things which can really trip you up as you grow.

The benefits of investing in compliance

The rationale for investing in compliance is relatively straightforward.

  • It helps to prevent infringement of laws and regulations, and can work in the company’s favour to mitigate fines if an infringement does occur.
  • It helps employees to understand potential risks and to be responsible and accountable in playing a role in keeping the company’s activities on the straight and narrow.
  • If the compliance programme is well-focussed upon the business’ key areas of risk, then that company can safely navigate problems arising and this gives strong foundations for business growth.

“If you think investing in compliance is expensive, you should try non-compliance”

Former US Deputy Attorney General Paul McNulty

How to approach compliance

A good way to start is simply by having a formal “compliance policy” in place, to encompass legal risk management processes across areas relevant to your business. This may range from employee protection, data protection/privacy, anti-corruption and bribery, to sustainability and corruption.

Once the policy is in place, it isn’t unfortunately as simple as sticking it on the intranet or in the induction pack. It does actually take effort to educate the workforce, and putting in place practical measures (such as easy to understand guidance notes or checklists) are the most important part of making compliance part of the overall culture. However, once employees can understand the basics of compliance and how it is relevant to their roles, then it has an empowering effect of making them free to make decisions without perceived restrictions of fear of unknown risks. It shows that you are responsible in your business dealings and this will help in discussions with customers, suppliers, auditors and insurance providers too.

From there, you need to carry out regular checks, updates to policy as relevant and ensure that the process for reporting concerns is clear. This in itself demonstrates a commitment to compliance and can identify potential issues before they surface.

Homework

Here’s some suggested questions to think about, in terms of compliance and your business.

1. What are the key areas of risk in your business? How do you currently mitigate those risks and what happens when things go wrong?
2. If you have a compliance policy in place, when was it last updated and how often is it referred to? Who does it apply to and why? Is it comprehensive or are there areas which are missing?
3. If there is no compliance policy in place, what other key documents do you use for educating new employees and do you have an intranet or key information portal where they can find out about processes and procedures for your business? Do you have training in place for employees around compliance? Do the employment contracts you use have reference to compliance or
4. How do you currently monitor compliance in your business? Where do you go if you need information around governance or risk? Is there a procedure in place for your employees to raise concerns?
5. What would you do if your company had concerns around its dealings with third parties? If you have a policy in place, does it cover this area?

Hey, listen, if you’ve read this far down the blog you are doing well. Gold star for you.
Now why not take the extra step to proactively put compliance on your boardroom agenda for the coming year.

What’s more, the team here at Serenwood can take care of it for you. Which means there’s an escape route right here with your name on it.

hello@serenwood.co.uk