How to deal with compliance concerns
Best Practice Advice & Compliance

How to deal with compliance concerns

May 1, 2013

by Tony Vidler

financial adviser compliance & regulation

What’s the issue  with all this compliance stuff in financial services?

Well…there are two issues really. The first is there is too much of it, and the second is that because there is too much of it advisers don’t know how to tackle it.

There is an entire “compliance industry” now that naturally suggests compliance is THE Answer to an advisers business problems.  That’s rubbish of course, but it is to be expected.  The first issue with compliance is that at the international level it would appear that it has already gone too far, and needs to be wound back.

The truth is compliance internationally has begun to fit in at one of two extreme ends of the spectrum, depending on the local government and market regulators views on interventionism:

1.  It is a non-issue completely, or,

2. It is a barrier to doing business.

There is already little middle ground…compliance approaches fall into one of the extremes.

Allow me to explain why I think that…

First, let’s be sure we understand exactly what the word itself means:


n. submission;

a.yielding; acquiescence; consent.

And equally, the next key word:


a.yielding; obedient; civil

So, compliance is simply about obedience.  It is an entry ticket to the business.

Obeying the minimum prescribed standards of the laws of the land is something that philosophically is a no brainer for professionals, and well designed consumer protection law shouldn’t shouldn’t present significant hurdles for most professionals. Ideally, it is about ensuring an acceptable minimum standard of behaviour and professional delivery is adhered to that protects consumers and ensures consistency of information and levels the playing field.

At one extreme of the compliance spectrum we have the situation where the manner in which regulation has been prescribed and evolved  in some jurisdictions borders on the inane.  Yes…I am looking at you in particular United Kingdom.  Go to the back of the class.

Any regulation of a highly prescriptive nature that intervenes and distorts normal market behaviour is bad regulation.  The UK approach is in essence that same as giving Moses 100 tablets of Commandments and telling him nobody is allowed to know what is on the 99th tablet until they’ve learned the first 98.  Guess what?  People – those very consumers you are trying to protect – opt out of the whole Commandments thing…it all gets too hard.

In New Zealand we are blessed in that we lagged much of the world in moving to a regulated financial advice space AND we were lucky to have some very experienced and smart folk who looked overseas, saw the flaws, and designed something quite different.  We have a priniciples-based regime where objectives are set, but it is open to interpretation as to how one achieves them.  That is not without its dangers for financial advisers of course, but the truth is that for most professional advisers in NZ regulation was pretty much “business as usual” – they were already operating well above the minimum standards the the law needed to impose.

Compliance requirements should not be incredibly difficult for practitioners to work with, or present barriers for consumers to engage professional advisers.   It should not prevent the real work getting done of helping clients progress and achieve their financial goals.

Here’s the tip for market regulators:  nobody that matters cares about compliance any more.

In the principles-based regulated world, it is basically business as usual for professionals (albeit with a few more forms and some additional costs).  For those advisers for whom compliance – merely obeying and meeting some minimum legal standards – is a concern, the bad news is most consumers, regulators and professional advisers don’t care that it is an issue for you.

In the heavily prescriptive regimes, consumers appear to be opting out of using advice or financial products in increasing numbers.  Clearly they do not care for the compliance environment they have been delivered.  Advisers are opting out too….product manufacturers are opting out or consolidating….nobody that produces or consumes financial services cares about compliance.

Obviously professionals have to be cognizant of the laws and ensure that all 100 tablets of local Commandments are adhered to. Which brings us to the second issue – how to ensure that you tackle it properly and get rid of any compliance concerns?

dealing with financial advice compliance concerns

It is simple.

Get stuck into it as early (and as regularly) as possible,

and give it the full attention and effort it needs.








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