Compliance tip: How to deal with regulatory change

Regulatory change can leave firms struggling to keep pace and maintain effective compliance. To ensure a successful and sustainable response to regulatory change, firms should consider the following areas.

Culture

Culture is the foundation of any business and if a firm’s culture is not sufficiently client-focused it will be unable to consistently deliver the right outcomes. While it is often tempting to focus on making smaller changes at the edge of an organisation during periods of regulatory change, addressing any underlying cultural issues will enable firms to adapt more effectively to forthcoming changes and respond to client need.

Business model

An effective business model is one that enables the firm to meet its objectives in a profitable manner, but is also flexible enough to enable firms to react to changing market conditions and client needs. To achieve this, business models need to be underpinned by effective governance, with senior management taking an active role in ensuring all areas of the business are controlled effectively and are setting the tone from the top.

Balanced objectives/strategy

Firms need to ensure their strategy has the right balance between commercial objectives and client outcomes. The FCA is focused on the outcomes clients receive, so if business decisions do not result in their fair treatment, any commercial gains are likely to be short lived and could ultimately result in regulatory censure.

Phil Deeks is technical director at TCC

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