Today’s financial regulatory environment is complex and often fast-paced. Before Basel II started making regulations more comprehensive, most financial organizations could expect to implement one new regulation at a time. Today, new regulation is a near-constant, and many must adopt a state of constant change. The result is often that financial institutions are struggling to keep up. Without the infrastructure in place to manage multiple large initiatives at once, effectively juggling the ever-increasing number of new compliance requirements is difficult.
While many organizations have been forced into using emergency task forces and jumping from one “fire” to the next, meeting compliance requirements in the nick of time, regulations are going to keep coming. That means implementing strategic solutions from a business level is the only way to move forward, while ensuring you continue to meet new regulatory compliance.
Implement the Right Tooling
Good tooling can help you to better understand every part of your regulatory environment. Software can help you keep track of everything, from data streams and dashboards to upcoming events and compliance requirements, including automated horizon scanning to find new upcoming regulatory changes. Depending on what you’re using, that may include automated alerts to inform stakeholders to start processes on time, progress tracking metrics including alerts when you’re behind schedule, and work management tooling to align teams and projects even across departments and branches.
Building a regulatory team
No tool is a replacement for good processes and good people. That means ensuring you have a baseline of good strategy in place before adopting the tooling and that necessitates having an office or team set up specifically for regulatory compliance. This becomes more pressing as the rate of new regulation accelerates, where you’ll increasingly need people to coordinate projects and compliance across the business, even as new regulation overlaps and contradicts.
Most often, this team must be multi-disciplinary, because you’ll need a mix of legal input to interpret law, business input to translate that to business activities, and finance. You’ll also want defined processes and defined roles with clear responsibilities and oversight from day one, so that those teams can provide value.
Assigning a team specifically to regulatory compliance means you have people who can collect and follow the data you need. You’ll have people to coordinate cross-team or multi-department regulations, to coordinate and prioritize regulations when more than one regulation affects a team or branch at the same time, and to take on high priority work.
Aligning People and Technology
Tooling can help you to create more efficient processes, ensuring you get alerts for regulations, sometimes even when they’re in the consultation phase. Yet, you need good teams and people to interpret regulation, to translate legal requirements into business requirements, and to align both with actual work being completed. Building cross-disciplinary teams helps you to align business, finance, and legal needs into a single team – but you’ll still have to translate compliance needs to business actions and compliance data back to ensure that it meets legal needs. Most importantly, your team has to be diverse, because the people capable of identifying legal needs are rarely the people comfortable with ensuring teams. Here, you should focus on identifying needed change based on compliance and law, prepare for that change by creating strategy and communicating business needs, assess the impact of change, and then use that data to build a regulatory roadmap with deadlines and milestones.
With a regulatory compliance team in place, you should be able to map out all upcoming compliance and regulatory requirements, so that affected departments always know what’s coming. Once you have those frameworks in place, you need ongoing communication to ensure teams stay aligned, to prevent siloes from forming, and to ensure work stays on track – and tooling will do a lot to help you there.
Implementing planned change normally means shifting responsibility to the business side, while the legal and compliance team is consulted to ensure work stays within compliance requirements. That includes updating those requirements as legislators and regulators change the law or add new guidelines.
That’s normally achievable, providing you have people in place to track those changes, because regulatory changes most often take years to go into effect. They’re updated during the 2–3-year gap based on assessments, input, and as regulators learn more about the problems they’re trying to solve. So, while there are large lead times, it’s important to continue to communicate with the regulatory compliance team and to update the strategy as necessary.
Once you have a good team in place, the next step is to invest in selecting good tooling to assist with decision-making. ACE+ Company’s RegTech arm, ACT can provide a solution here with dashboards and data analysis if you still need tooling, including software to help you bridge gaps between interpreting regulation and implementing it.
ACE can help in setting up best-practice processes as well, with our 7-Step Lifecycle to assist and aid change management, we can help you to initiate and set up a regulatory office or team in the business, and we can help you to set up the coordination for the regulatory activities within your business.Back to Best practices for change management in regulatory compliance