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Senior Managers Regime adds complexity to the Chief Compliance Officer’s role

30 April 2015

New rules on individual accountability are increasing the challenges of the chief compliance officer (CCO), adding to a complex and evolving role, finds Deloitte, the business advisory firm.

CCOs getting to grips with the new Senior Managers Regime and the Senior Insurance Managers Regime, effective Q1 2016, will be adding to the already lengthy list of expectations they must meet. The end result may see CCOs reporting more frequently and directly to the CEO. 

David Strachan, Head of Deloitte’s EMEA Centre for Regulatory Strategy, said: “The cumulative effect of regulatory change is significant. For CCOs, taking on a great deal more in their day to day roles has become the norm.”

Deloitte’s report – ‘The Changing Role of Compliance’ – points to an increasingly ethical dimension to the issue of regulatory compliance, as well as the impact on talent and technology resourcing.

1) Judgement-based supervision: Compliance is an issue for everyone in the firm, not just the CCO. The reinforcement of accountability and clarity around individual obligations will lead to a significant change in culture and behaviour, whereby staff are encouraged to take responsibility at all times for all actions.

2) Multiple demands: An expanded CCO role will start to include, for example:

  • The ability to apply behavioural economics to identify risks;
  • acting as adjudicator in claw back cases; and 
  • continual assessment of compliance and conduct risks in new technology

3) Talent challenge: As the CCO role encompasses a broader skillset, demand will be higher for those professionals who can demonstrate expertise beyond traditional requirements. Appetite for multi-talented compliance officers comes at a time when some firms are under pressure to reduce costs to offset the effect of higher capital and liquidity requirements. A “grow your own” talent culture is likely to develop and future recruits could be sourced through graduates, often perceived as more receptive to new ways of working.

4) Technology changes: The correct technology roll out will be a prerequisite for an effective compliance programme. Having the appropriate technology solutions and exploiting these will enable CCOs to improve the efficiency of compliance operations and expand their firm’s ability to manage and monitor compliance risks. Technology supported analytics around compliance data will ultimately bring to the Board’s attention more relevant information on which to base compliance decision-making.

Strachan concluded: “Until this point, many areas within the CCO’s remit fell into a ‘grey area’ but the new Senior Manager regimes will require absolute clarity. This will minimise any scope for uncertainty or misunderstanding around the boundaries of the CCO’s responsibilities.”

End

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

Fern Hammond
Deloitte LLP
+44 020 7303 2329
+44 078 2689 1752
fhammond@deloitte.co.uk

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