Individuals depend on their banks to be the perfect pillar of integrity. Banks hold the futures of people in their hands. People place their trust, their finances and their financial futures into these banks hands.
After Australia’s largest bank broke their customers’ trust and severely damaged their brand reputation through money laundering and mismanagement, the financial services sector has been scrambling to prepare for the Royal Banking Commission.
The Royal Banking Commission demonstrates how people’s perception of an organization can radically change the compliance landscape. Similar to the 2008 financial crash, these types of events highlight regulatory pressures in the industry.
In this case, the Australian people have demanded transparency and accountability, and put pressure on the system and the government to do something. The royal commission, mandated by the parliament, will investigate misconduct in the financial services sector to restore waning faith in the country’s financial systems.
While violations like these provide challenges, they also provide opportunities to bring compliance functions to the forefront of leadership’s mind within organizations. For once, compliance officials can drive a company’s brand reputation and vision, rather than feel like they’re disrupting a company’s larger goals.
Events like these provide opportunities for compliance professionals to stand up and be the hero of their company. Can your compliance professionals lead the way towards preventing these types of scandals from ever touching your organization? Can you take charge to maintain the integrity of your company’s brand, and prove the value of your compliance function to the wider organization as a whole? Can you convince your leadership to view compliance, not just as an opportunity to throw money away, but as an opportunity to shore up against millions of dollars of potential fines when regulators come knocking?
Traditionally, compliance has been viewed within organizations as a cost center. It costs a business money, and is often dismissed by leadership as a pain in the rear and as providing little to no value to a company.
However, with the cost of noncompliance and regulatory scandals taking up more and more space in today’s headlines, and consumers holding companies more accountable to their ethical responsibilities, the role of compliance and compliance officials within an organization is radically changing. Not only is a focus on compliance becoming a growing necessity in today’s regulatory landscape, it’s also an oft-overlooked opportunity for business expansion.
A prime example of how compliance enables business rather than deterring it is the case of Papua New Guinea. Years ago, it was practically impossible to do much business in Papua New Guinea due to the extent of money laundering that took place there. However, as compliance started to clean up the regulatory markets, legitimate, profitable businesses were able to move into the market and thrive.
Having the proper compliance frameworks in place isn’t, in fact, a nuisance, it’s just good business. If a company, or a country for that matter, has a reputation for integrity and safety, it establishes a solid foundation for business to grow and prosper.
Scandals like the banking crisis in Australia invite us to reconsider the effectiveness of our own compliance functions and address any gaps we find there. Consider how you can transform your compliance program from one of a necessary cost of doing business to a program that proactively cultivates a culture of compliance to prevent scandalous risks and stand up to the test of royal commissions.
One slice of the compliance pie you can address today is your policy management solution. A policy management solution can help you monitor and increase your program’s effectiveness – including who’s done what, why and when. It serves as a great communications tool to implement and enforce a tone from the top.
While the implications of the Royal Banking Commission expand far beyond the banking sector, compliance officials need to step up to proactively protect their organizations. While the official commission only explores banking, the effects of it are sure to snowball into other financial service sectors. Banking is simply the highest profile, the largest fish to fry and therefore the biggest target to hit first.
While the focus is currently on banking, we can be sure to see the effects of these banking inquiries in the insurance, wealth management and eventually the consumer finance sector at its most basic level, including car and appliance loans. Situations like these impact organizations, and people, at all levels
For help becoming the hero of your brand’s reputation and to discover how you can proactively manage your risks today, connect with a Mitratech representative.