Compliance culture must start with ‘why?’

— 1 minute read

EXCLUSIVE A good culture of compliance within wealth management businesses must start with why certain regulatory measures are being implemented in the first place, according to a panel of compliance experts.

Speaking exclusively on the InvestorDaily webcast yesterday, Advice Compliance Support managing director Nikolas Kloufetos said that staff they need to understand why they’re undertaking compliance measures, noting it’s not enough for staff to simply be aware of them.

“For example, you’ve got 10 documents and need to make sure [a certain] sentence is on all of them. Well, why are you doing that?” he said.


“If you start off with that premise then you might actually end up with a more concise document by removing stuff that may not need to be there. That’s just one example – maybe some kind of training, not necessarily on how you do it, but why you do it, and what the impact is across the organisation and on the customer.”

Mayflower Consulting founder and chief executive Sarah Penn noted that, in an organisation with a good compliance culture, the customer has to be at the heart of what people do.

However, she added that organisations also need to think about the current customer in the future, and not just in the present.

“What’s best for the customer? What is really going to help that person, that actual living breathing person, achieve what they are trying to get out of life? If you start with that first, you’re a lot less likely to run into regulatory issues, and then your compliance and everything else kind of neatly wraps into everyone's jobs,” Ms Penn said.

Ms Penn also cited APRA’s report into CBA governance in pointing out that people are very afraid to make decisions in big organisations. She said that generally speaking, people never get first for not making a decision, and that not doing anything generally has no ill consequences.

“That was one of the core things that was called out in the CBA report is you have too many people in a room so no-one’s really accountable for anything. That happens because it’s a risk mitigation strategy for everybody in the room. If there’s 15 of us when a decision gets made [then] none of us are personally going to be pulled up for anything,” she said.

“Because of that kind of groupthink, it takes away from the opportunity for people to really think very carefully about what they’re doing and the best thing is for the organisation and make some of those hard calls.

“Yes, implementing technology in your business is not an overnight, click-your-fingers thing, but in the long term it is going to get you a much better outcome for what you’re doing. Personal responsibility, making some hard calls and really having the time and space to think about things properly. It’s the lack of thinking is what tends to bring us all undone.”

Centrepoint Alliance general counsel Marty Carne agreed with all of those points, saying building a good culture is all about accountability and specificity on goals.

“I used to be called in another organisation the ‘why’ man, because I always asked ‘Why? Why are we doing this? Why are you saying that?” Mr Carne said.

“We in the industry have the greatest responsibility, the noblest responsibility to look after other people’s wealth and their savings. They’re not all wealthy people. These are mums and dads, and they’re entrusting us to look after their money, their futures, so we as an industry have to live up to that challenge.”


Compliance culture must start with ‘why?’
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Adrian Flores

Adrian Flores

Adrian Flores is a features editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected]

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