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Compliance tip of the week: Don’t play the blame game


Things go wrong in business. Clients leave or complain. Profits are down or disappear. You find that an adviser in the firm has been giving bad advice or upsetting staff. The regulator does not listen. The ombudsman disagrees. It is so tempting to blame someone else. They may actually be culpable.

Do not do this. Work, like life itself, involves things you can influence and things over which you have no control. Do what you can to prevent a recurrence of the situation or reduce the damage caused.

Regulators want firms to do root cause analysis after complaints. Actually, everything that goes wrong in your business whatever the outcome should be the subject of this type of analysis. Hospitals, factories, and governments all try to understand why things have failed. There is no scientific way to do this. You just have to tell the story as objectively as possible and seek to identify areas where you can improve what you did.

Start with staff or business partner recruitment. Check for tell-tale signs during that process. Have someone neutral examine your supervision arrangements, including the business’ reaction speed to problems. View your client agreements, suitability reports, checking arrangements, how client-facing staff faced them. Consider how your board and senior managers discussed compliance or other business issues and whether they looked at them at all. How did they follow things up?

The golden rule of root cause analysis is systems, senior management, policies but not individuals are to blame for almost everything that goes wrong. Even thoroughly bad people need environments open to them in order to do any real damage. The key trick, though, is to find ways to improve. Many of the things that businesses find through a constructive self-trawl probably did not “cause” the problem which triggers it. However, they do need fixing.

Adam Samuel is an independent compliance consultant



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