While not every business legally requires a dedicated compliance officer, many businesses would benefit greatly, especially those operating in highly regulated industries or those with complex compliance needs.
- What is a compliance manager?
- Reasons to hire a compliance manager
- How to manage without a compliance manager
Ultimately, whether or not to hire a compliance officer is a business judgment. Consider factors like your industry, the complexity of your operations, risk tolerance, and budget.
A. What is a compliance manager?
Overall, the role of a compliance manager is multifaceted, playing a crucial part in any organisation. They're the watchdogs of ethical conduct, ensuring the organisation operates with integrity and avoids legal and reputational risks.
Key compliance manager responsibilities
Every industry has regulations and standards that must be complied with.
Some compliance managers focus on a specific industry or department, such as environmental or corporate compliance. This may be a dedicated role or a responsibility taken by a particular person, such as the CEO or CFO.
This is especially the case for Money Laundering Reporting Officers (MLRO) and, to a lesser extent, Data Protection Officers.
i. Information dissemination
Compliance managers are the knowledge spreaders, making sure everyone knows the rules. They educate employees about compliance issues, policies, and legal obligations through workshops and training programs.
They also keep tabs on ever-changing legal landscapes, regulations, and internal policies relevant to their industry. And keep the organisation up-to-date on industry best practices and emerging compliance trends.
ii. Policy management
Compliance managers help design and implement policies and procedures that comply with these rules and industry best practices. They're the architects of the organisation's ethical framework.
iii. Risk management
Assessments and audits help to identify potential non-compliance and ethical risks. Compliance managers conduct these to help develop and implement risk management strategies for various areas of the organisation.
iv. Breach investigations
If potential breaches occur, compliance managers investigate and then take corrective action when necessary. They're the detectives on the case, ensuring ethical conduct throughout the organisation.
v. Compliance reporting
Compliance managers are the voice of compliance, keeping everyone in the loop. They inform senior management and external regulatory bodies about the organisation's compliance status through reports and presentations.
B. Reasons to hire a compliance manager
Even if there is no legal requirement for a compliance manager, there may still be an overriding need to hire one. This is the case for heavily regulated industries, those with complex compliance needs, where needs frequently change, or where there is a history of compliance issues.
i. Heavy regulatory burden
These heavily regulated industries need compliance managers or MLROs.
- Energy: oil and gas companies, electricity providers, etc.
- Financial Services: banks, insurance companies, investment firms, money service businesses, accountants, estate agencies, bill payment service providers, trust or company service providers.
- Defence: aerospace companies, weapons manufacturers, etc.
- Healthcare: hospitals, pharmaceutical companies, medical device manufacturers, etc.
- High-Value Dealers: Art and others handling high-value cash payments
- Property: estate agencies, letting agencies.
- Technology: data centres, social media platforms, software companies, etc.
- Telecommunications: phone companies, internet service providers, etc.
ii. Complex compliance needs
- Businesses with high reputational risk: where non-compliance could damage their brand image.
- Large corporations: due to the sheer size and complexity of their operations.
- International operations: to comply with regulations in multiple jurisdictions.
- Sensitive data: like personally identifiable information (PII) or financial data.
iii. Frequent changes & compliance issues
Sometimes, the need for a compliance manager is based on the relative compliance burden. This happens when there have been previous issues, or there are frequent changes in regulations or personnel.
If your company has faced fines or penalties for non-compliance in the past, then a compliance manager can help ensure that policies are adhered to, training is effective, and behaviour is scrutinised.
When an industry has frequent regulatory changes, it can be very difficult to stay compliant without dedicated oversight. This can be the case in new technologies or those that have become a new focus for regulators.
Finally, keeping track of compliance may become increasingly difficult if your company is growing rapidly because of new staff and staff turnover.
C. How to manage without a compliance manager
Larger businesses often have a compliance manager dealing with training and record-keeping. However, smaller businesses rarely have that luxury, meaning the office manager or CEO has to cover the responsibilities.
By following a few simple tips, those without a compliance manager can still reduce the risk of breaches.
Compliance management software is relatively inexpensive and can help you ensure everyone is trained properly. It also shows the regulators that you made an effort to avoid breaches, should one occur. This may make the difference between a small fine or one that threatens your business.
It is important for small businesses to take compliance seriously. By understanding the key compliance issues that are applicable and taking steps to comply with them, small businesses can avoid costly fines, penalties, and legal action.
Looking for more compliance insights?
We have created a series of comprehensive roadmaps to help you navigate the compliance landscape, supported by e-learning in our Essentials Library.
We also have 100+ free compliance training aids, including assessments, best practice guides, checklists, desk aids, eBooks, games, posters, training presentations and even e-learning modules!
Finally, the SkillcastConnect community provides a unique opportunity to network with other compliance professionals in a vendor-free environment, priority access to our free online learning portal and other exclusive benefits.
