I have seen and used this quote many times:

“If you think compliance is expensive, try non-compliance” – former US Deputy Attorney General Paul McNulty, 2009.

It is helpful to consider what you would do in times of economic downturn?  Times where the budget is tight and bills keep rolling in.  Would you cut compliance costs from your budget?

Volkswagen is a good example of the true cost of non-compliance.  Over and above the fine issue to them by the Environmental Protection Agency post being exposed for bypassing emission tests in 2015, share prices tumbled, vehicles were recalled, executives resigned, and sales dropped. Unfortunately, there are many more examples.

The financial services industry has traditionally been subject to strict regulatory requirements.  After years of practice, one would think that our industry has refined the art of compliance, but one just has to take note of the fines issued by our regulators in the recent past to realise that we have not arrived.  As an example, African Bank Ltd was recently fined by the Financial Sector Conduct Authority for misleading advertising.

Alas, it seems the work is never really completely done.  Compliance is like chasing an endless summer:  If you stay in the same place for too long, chilly weather will soon catch up with you.  In the same way, compliance is not a once off exercise of writing a policy or implementing a process.  This is the case for various reasons:

• Regulatory landscape: The regulatory landscape constantly changes. New legislation and regulation are enacted and existing legislation and regulation changes.
• Innovation: Innovations, such as AI, ensure that the risks that your business faces frequently changes.
• Regulatory posture: A regulator may take a stricter stance on the enforcement of specific regulation due to an uptick in certain undesired behaviour in a specific industry. Regulators also issue guidance to their industries to enhance understanding by the industry and clarify interpretation by the regulator. Local regulation is also influenced by international standards and best practice.

Compliance is no longer confined to the financial services industry or big corporate entities. Ask those that have recently become accountable institutions in terms of the Financial Intelligence Centre Act, or those that are still scratching their heads over what exactly they should be doing as responsible parties in terms of the Protection of Personal Information Act. Whether you produce food and must adhere to food safety standards or whether you sell that food at a corner store and need to adhere to occupational health and safety regulations, compliance touches our lives on a daily basis.

Compliance is also not solely the responsibility of the compliance department within your business The whole business, from C-suite to all employees and contractors must understand the benefits that a solid compliance programme brings. One of these benefits is a good reputation. When a business can demonstrate their commitment to compliance it will enhance its reputation for doing business with integrity, transparency and in an ethical way. This in return will foster trust with employees, customers and investors.

A strong compliance culture also encourages a pro-active approach to risk management. Employees are encouraged to “say something when you see something” and this enables a business to identify and address possible risks before it materialises in a fine or reputational damage. In a business with a good compliance culture, where accountability and ethics are valued, the jobs of those tasked with making decisions are simplified because all decisions are underpinned by integrity.

Although avoidance of a hefty fine from a regulator remains a key reason for compliance, it should not be the only reason. It should also be about living and promoting a company’s values.

At wauko we live our values through a strong compliance culture. Connect with Marianne Mokken on 021 819 7813 or mmokken@wauko.com to share your thoughts on all matter’s compliance related.