The Compliance RevolutionHow Compliance Needs to Change to Survive
The Compliance Revolution—Practical, Powerful Changes for Strategic Organizational Value Compliance is absolutely critical in creating a robust and resilient organization, one which is trusted by clients and contributes to market stability. Firms must approach compliance differently in order to meet these standards. Written for compliance staff, regulatory organizations, and senior management, The Compliance Revolution explains how key changes in compliance affect underlying principles, practices, roles, expectations and values. This valuable resource for global practitioners assists in navigating compliance requirements and implementing solid protection for a sound organization. Author David Jackman presents a coherent model for understanding and applying key developments in regulation and compliance. While the model is based on financial services, it can be applied to any sector and industry. It identifies five critical compliance components: Start-up, crises, expansion, sustainability, and outcomes-led focus. You will also discover: Why compliance is worth spending money on What your firm could and should be doing differently The importance of ethics in compliance and regulatory challenges How to create a pro-compliance culture Ten principles of good governance and why good governance matters How to employ judgment-based compliance The features and benefits of corporate maturity The Compliance Revolution is a crucial asset for all those with stakes in compliance—board members, compliance managers, and employees. David Jackman outlines key compliance challenges and reveals the practical tools and techniques required for successful practice. The insight, examples, and strategies in this comprehensive guidebook will help you and your organization achieve increasingly efficient, substantially more effective compliance procedures and practices.
Preface xi Acknowledgments xiii About the Author xv PART ONE Theory CHAPTER 1 New Compliance 3 The Challenge 3 Turning Point 4 Traditional Compliance 4 New Compliance 5 Shared Journey 5 CHAPTER 2 General Model of Regulatory and Compliance Development 7 Introduction to Development Models 7 General Model of Regulatory and Compliance Development 8 International Comparisons 11 Example of the UK 11 Using Regulatory Toolkits 13 Conclusion 14 Endnote 14 CHAPTER 3 Is Compliance Worth the Money? 15 An Unfortunate Unconformity 15 The 2008 Global Financial Crisis 16 Legacy of Failure 18 Post-2008 19 Increasing Compliance Spend 22 A Line in the Sand 22 Future Challenges 24 Conclusion 24 Endnotes 25 PART TWO Practice CHAPTER 4 Ethics 29 Definitions 29 Ethics in Regulation and Compliance 29 An Ethical Framework for Financial Services 30 Ethics in Business 31 How Should a Compliance Practitioner Approach Ethics? 32 Ethics at Work versus Ethics at Home 33 Steps Towards Developing Ethics 33 Main Tools for Identifying and Applying Corporate Ethics 35 Three Critical Steps in Establishing Ethics 35 Ethics in Regulation 56 Principles and Ethics 57 Advantages and Disadvantages of Principles 58 Principles-Based Regulation 60 Conclusion 65 Endnotes 66 CHAPTER 5 Culture 67 Pro-Compliance Culture 68 What Is Culture? 69 What Is a Values-Led Mind-Set? 69 Changing and Embedding Culture 70 How to Change Culture 74 Creating Crucibles in Regulation—Examples 77 Regulatory Methodologies 80 UK Indicators 83 Fair Dealing in Singapore 88 Measuring Culture 89 Conclusion 93 Endnotes 93 CHAPTER 6 Good Governance 95 Why Does Governance Matter? 96 What Is Corporate Governance? 97 A Model of Good Governance 101 Ten Principles of Good Governance 102 Conclusion 131 Review: The State of Corporate Governance 131 Endnotes 138 CHAPTER 7 Outcomes 139 Why Is This Step Up So Significant? 139 What Is Outcome? 141 Why Is Outcome So Important? 142 Development Matrix 147 Outcomes in Singapore Regulation 149 Outcomes and Enforcement 150 Conclusion 151 Endnotes 152 PART THREE Purpose CHAPTER 8 Community 155 Importance of Community 156 Role of Companies 156 Social Usefulness of Banks 158 Role of Compliance 159 Definition of Community 160 Community Principles 161 Sustainable Communities Principles—What Do They Mean? 162 Development Matrix 164 Corporate Social Responsibility 167 New Reporting Standards 167 Behavioural Economics 168 Vulnerable Consumers 171 Conclusion 174 Endnotes 174 CHAPTER 9 Corporate Faith 175 What Is Corporate Faith? 176 Managing Corporate Faith 177 The Value of Corporate Faith 177 Dimensions of Corporate Faith 179 How Faith Develops 183 Corporate Faith into Practice 184 Professionalism 184 Judgment-Based Compliance 186 Conclusion 186 CHAPTER 10 Corporate Maturity 187 What Is Maturity? 187 Maturity and a Direction of Travel 189 Unconditionality 194 The Underlying Process 195 Corporate Maturity Framework 197 Cavitation 198 Connecting the Five Stages of Development with the Five Levels of Maturity 199 Conclusion 199 Index 201
DAVID JACKMAN is a non-executive director, writer, lecturer and TV and radio commentator and has his own consultancy, intotheclearing.com, specialising in helping firms to work 'Beyond Compliance'. He also founded the Ethics Foundation and the 'Ethics Mark®' for value-led businesses, which he is launching in Singapore.
As demonstrated by their contribution to the 2008 global financial crisis, traditional compliance practices are severely lacking in effectiveness. Compliance is absolutely critical in creating a robust and resilient organization, one which is trusted by clients and contributes to market stability. It is clear that to achieve this the way compliance is approached within firms is in need of change. The Compliance Revolution will help better prepare you and your organization in implementing effective and efficient compliance procedures and practices. Compliance is rapidly becoming more complex irrespective where you are located in the world as requirements become more demanding and, increasingly, internationally coordinated. Written for compliance staff, regulatory organizations, and senior management The Compliance Revolution explains the significance of key changes in compliance affecting underlying principles, practices, roles, expectations and values. David Jackman provides a valuable guidebook for global practitioners, one that will help navigate compliance requirements and help in effectively protecting their firm. Jackman sets out a coherent model for understanding and applying key developments in regulation and compliance. While the model is based on financial services, it can be applied to any sector and industry. It identifies five critical compliance components: Start-up, crises, expansion, sustainability and outcomes-led focus. In this comprehensive guide, you will discover: why compliance is worth spending money on what your firm could and should be doing differently the importance of ethics in compliance and in meeting regulatory challenges how to create a pro-compliance culture why governance matters 10 principles of good governance how to employ judgment-based compliance what constitutes 'corporate maturity'and why it can be an advantage Highlighting the key compliance challenges and helping all those with a stake in compliance—which ultimately is not only every board member and compliance manager, but every employee — The Compliance Revolution reveals the practical tools and techniques required to enhance the effectiveness of the compliance function.
Praise for The Compliance Revolution "Staying ahead of the change curve is essential for maintaining a successful and viable business. With the paradigm shifts we are experiencing in regulatory regimes and resultant systems of governance, this book is timely and offers highly perceptive road maps for organisations and their compliance functions to respond in a sustainable manner that engenders trust and confidence. David writes with honesty and directness that is refreshing and consistent with the standards of ethical practices he advocates." —Vicky Kubitscheck, CRO and Compliance Director, Police Mutual (insurance) Group; author of Integrated Assurance: Risk Governance Beyond Boundaries " David Jackman was in the forefront of the movement to introduce an ethical dimension into the compliance sphere. Many a corporate failure would have been prevented if boards and senior management weighed the ethical implications of their decisions. The Compliance Revolution makes an important contribution by explaining how ethics, regulation and compliance can co-exist. The book breaks new ground by offering practical guidance, tools and examples to ensure that boards are driven by ethical considerations as well. It is a much-needed publication for board directors, compliance and ethics professionals, senior managers and even regulators." —Dayanath Jayasuriya, President's Counsel; former Chairman, Securities and Exchange Commission and Insurance Board of Sri Lanka "This is a brave attempt to posit a theory of change for the compliance function. The scene is financial services, and compliance with regulation, but the theory and practice will apply to any sector and to the additional tasks of a compliance function. Whether you wholly agree with the over-arching thesis or not, this book will help you develop your own theory of compliance, its role, and how it must change or evolve to succeed." —Robin Ford, Regulatory consultant; former Executive Commissioner British Columbia Securities Commission; former Chief Counsel, Insurance UK Financial Services Authority "David has made the abstract concepts simple and easy to grasp. It's both thought provoking and inspirational for those intending to or are pursuing a career in compliance. There are fundamental truths which I fully agree – 'when ethics are real and effective, the quality of compliance will be high.' The power of a right compliance culture cannot be underestimated. David highlighted succinctly the pitfalls to avoid and how important continuous stakeholder engagement is for an organisation to maintain the right compliance mindset. And, for the compliance professionals, how necessary it is to be clued in to the operations." —Adeline Koh, Head of Regulatory & Compliance for Asia Pacific region of a global insurance group