Compliance

Central to any discussion of the regulation of financial services is the concept of “compliance.” The Concise Oxford Dictionary lists compliance as “action in accordance with request, command, etc.” So it has the force of something that leads somewhere, an active approach to a suggestion. The dictionary also adds a secondary definition, “(degree of) yielding under applied force.” This is a more passive action, a sense of being cajoled into doing something. In reality, we can see both definitions at work in the relationship between regulator and financial institution. Some organizations work willingly to meet regulation; others more reluctantly, only doing the minimum to avoid punitive action. For those regulations not enforceable by law, a two-step process often is necessary:

• A case has to be made to ensure acceptance of the benefit of the investment in compliance.

• Compliance is scoped, planned for, and implemented.