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More needs to be done for compliance

The industry needs professional standards for risk and compliance professionals.

These are the words of Rachel Waldren, from Murray Waldren Consulting, who spoke at the Refintiv Australian Regulatory Summit, earlier this week. Waldren looked beyond the role of regulators like ASIC and APRA to the domestic and international implications of the Royal Commission into Banking, Superannuation and the Financial Industry.

Waldren believes compliance should be at the same level of seniority as senior managers in order to achieve the necessary leverage with the board.

“We need to make sure that the people we put into these roles have that level of seniority and respect.”

This, according to Waldren, should be backed with some kind of qualification.

“There are many so-called compliance professionals because there is a shortage. Some have come straight of university and have read the legislation and believe they should be called compliance professionals.”

Waldren’s comments reflect those of Samantha Carroll from ASH St. Lawyers, who noted in March at the #Accelerate RegTech Conference that there was shortage of compliance professionals. “You cannot find good compliance people in the industry with deep expertise. Having seen the industry over the last 15 years, it has evolved. So, you might have people who have been in the industry for 15 years, but they have an ‘old-school’ mentality when it comes to compliance.”

Waldren’s focus, however, is on those compliance professionals who are inexperienced; Caroll was talking about those who had been in the industry for a long time and who have been slow to adopt newer regulatory technologies.

“We run the risk, post-Hayne, of putting compliance professionals into roles just for the sake of it.”

Current compliance all wrong

At the same panel discussion Claire Wivell Plater, Executive Consultant at Fold Legal, said that compliance is currently being done ‘all wrong’.

“I think Hayne said it in his report: that unless we spend as much time measuring actual customer outcomes as we do activity, we won’t see any real change,” Plater said. “It’s like a war out there, trying to hire talented compliance professionals.”

Plater added that there is a lot of talk about the three lines of defence but also asked: what about baseline compliance?

“If you read the industry submission to the Sedgewick report, for example, and if you read the scripts and the evidence that was given in the Westpac ASIC case on call centre campaigns for super, you see that those people are, in a sense, being treated like dumb terminals—they are being told what to do, and in some cases how to do it, but not necessarily in any way that results in good outcomes for the consumer,” Plater argued.

She believes that, at the moment, resources are being thrown into the wrong areas.

Hayne and international implications

Niall Coburn, Regulatory Intelligence from Thomson Reuters, who sat on the panel, said another issue that needed to be considered in the compliance space is what happens now—ie after the Royal Commission, especially since it garnered so much international attention.

“It will be ‘Ignore compliance at your Peril!’ because it goes back to your duty of care,” said Coburn. “It goes back to your board not making proper or adequate inquiries. It goes back to senior management not having been up-front with the board about serious issues within the bank.”

Everyone is looking at what happened in Australia because, according to Coburn, “…they don’t want it to happen in their own backyard.”

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