Less is More for Compliance in 2021


In 2021, Compliance expects to face a reduction of staff and budget dedicated to its department, contrasting with the current need for better monitoring of employees’ activities and the raising of regulatory enforcement. This year was a time to re-evaluate compliance programs and review processes. Many Compliance departments spent weeks doing so, coming to the conclusion that a more efficient technology is the only way to reduce the cost of its activities, improve the monitoring of employees and transform inadequate Compliance programs.

Compliance specialists in Europe believe that some financial services firms can suffer a double blow from both COVID and Brexit in 2021, badly impacting the sector. According to ACOI, firms are expecting a conservative and cautious budget for Compliance next year, leading Compliance leaders to be more creative to respond to the new work patterns. Furthermore, a recent survey suggests that while some Compliance officers believe in a budget reduction in 2021, near-term projects won't be impacted and in many cases their budgets for 2021 will remain intact.

On top of budget challenges Compliance should consider that regulators will be looking at firms’ ability to demonstrate action across all aspects of the organization response to the crisis and post-crisis. Critical areas that regulators are likely to look more careful at are Conduct and Culture, Market Conduct, Employees Training and Outside Business Activities. 

  • Conduct and Culture

With the shift to home office, keeping the culture (if a good one) and measuring conduct risk will be even more essential to ensure Compliance. The chances of changes in the company culture are very high when employees and managers have less contact. It is crucial to enhance communication across the company to maintaining a healthy culture and promote good conduct.

  • Market Conduct

During 2020, regulators warned that all market participants should act to support the financial market integrity, ensuring that employees, senior managers and members comply with the Market Abuse Regulation. The focus always was to make sure firms have controls in place to address market abuse, conduct and managing conflicts of interest as needed during the crisis.

  • Policies and Procedures Training

Regulators see training as an essential part of a firm's’ action plan to maintain business continuity, market integrity and remind staff of their regulatory obligations. Many companies updated their policies and procedures during the pandemic, and the expectation was not only to review and update but make sure employees were well trained and timely aware of changes.

  • Outside Business Activities

OAB management is crucial to protect firms, regulators require that forms are created and all supervised persons should complete the form on an annual basis and whenever changes are needed. Firm then need to audit, track and report OBA and make sure they are sufficient to identify and monitor conflicts of interest. Regulators are looking carefully into OBA in light of changes to remote working arrangements and other risks related to COVID-19.

Choose a partner that helps demonstrate commitment to regulators

The good news is that technology can assist firms in adapting to new work patterns and comply with all these obligations. Firms can prevent and detect non-compliance and potential conflicts of interest using technology in their compliance program and processes.

The ideal software should cover as many areas of Compliance as possible. A unique software solution allows building a robust data set for Compliance to identify trends and patterns and act fast before problems and conflicts arise.

With budget pressure, Compliance needs to be able to transform programs, and a consolidated approach to technology is the best way to meet compliance expectations.

It’s hard to say what the future of Compliance looks like as there lots of uncertainties ahead. For sure, Compliance and Risk Officers are worried about how they will achieve the desired goals with less budget and staff in the coming months.

If it is your challenge, we recommend you to read our recent white paper that covers how you can do all mentioned in this blog with one platform that automates the entire compliance activities you need in 2021 and forward.

And if you are starting the journey to select a Compliance technology, we have a new resource that gives lots of tips on how to make the process painless for you and your team. You can download this guide here or contact one of our experts for detailed information.