Rachel Reeves' letter to the FCA reminds us how important financial services are to the UK economy. Could we, as compliance professionals, be more bullish as to the benefits of compliance.
Big Ambitions, same old problems
On 8 October 1980, British Leyland launched the Austin Metro. A small car with big ambitions, it was hoped it would turn around the fortunes of an ailing car manufacturer. British Leyland had invested heavily in a new Longbridge factory, with high tech automation. Launched after many delays, by a company that had been dogged by strikes, poor production quality, and continually needing bailouts from the British Government, could this be a turning point after the decline of Britain's heavy industry in the 1970s? The car was a success, receiving much praise, with its patriotic adverts (now seeming a little jingoistic) and dealers shifting thousands of units. On its own, however, it couldn’t carry all that weight, with pay disputes between management and the unions continuing, losses still mounting, resulting in more requests for money from the Thatcher government, who, of course, was not keen on handouts. It was clear that more positive employment figures, and any sort of revival of Britain's economic prosperity, which had been so much in turmoil in the 1970’s, was not going to come from the car industry in the 1980s, or for that matter, manufacturing. Step forward Service Sector.
Growth, innovation, and more growth
I cannot do any sort of justice to writing a history of the decline of heavy industry and the rise of the service industry, the deregulation of financial markets and all that followed. However, in Rachel Reeves’ letter to the Chief Executive of the FCA, ‘Recommendations for the Financial Conduct Authority’, it is clear, if anyone needed reminding, how important financial services has become to the UK’s economic prosperity. Not just what it contributes directly (£208.2 billion to the UK economy in 2023), but perhaps more importantly, acting as the enabler for businesses to grow and develop. Growth, growth, investment, growth, innovation, growth… and so on. Among the dozen or so mentions of growth in the letter, there's also the reference to streamlining the FCA's Handbook. This is something that was indicated back in the summer, with the FCA looking to consult to identify rules which could be removed or simplified if they overlap with the Consumer Duty. That's all reasonable, but I sense a negative connotation to the word regulation when placed in the same vicinity as the word growth. Are they mutually exclusive?
Compliance: A force for good
Compliance is, by its very nature, a support function, and is therefore not necessarily at the top table where the strategic growth and commercial decisions of firms are made. But isn't that a shame, because compliance and financial crime done well means better engaged, better informed, better supported and more satisfied customers, therefore, higher net promoter scores and advocates of firms rather than detractors.
How do we, as compliance professionals, sufficiently bang our own drum? Without wishing to generalise too much, perhaps we don’t normally come from a sales background, we might be analytical by nature (accepting there are lots of pros and cons to this), we might not be considered natural risk takers. Perhaps, there is room to be more bullish as to the benefits of compliance, to ensure firms’ senior leaders have sufficient vision as to the role it can positively play to contribute to the realisation of the firm’s goals.
A more positive spin
Hopefully, with the advent of Consumer Duty, the benefits of compliance by design have become more obvious. Far better to get things right first time than retrospectively attempting to build it in, with the prospect of costly remediation programmes.
During our careers, most of us, at some point, probably feel like an undervalued resource, but as well as accepting this, could we do more to get our voice more positively heard? A few thoughts:
Are the Compliance team's goals demonstrably linked to the goals of the firm?
To what extent have conversations with stakeholders shifted to focus on ‘the benefits of’, rather than ‘the consequences of not’ (more carrot, less stick)?
Is there an imbalance between reactive compliance (reacting to the latest issue, like supporting remediation projects) and being proactive to help support its growth agenda (e.g. understanding how employees' educational needs change, working closely with Product teams).