What is Compliance?

The role of the Compliance Officer has grown into one of significant importance over the past decade. Organisations are increasingly relying on their Compliance Officers to provide them with guidance and recommendations regarding their regulatory responsibilities. In addition, the Regulators view the Compliance Officer as an important extension of their monitoring structures.

Whilst ultimate responsibility for understanding and overseeing the management of compliance with applicable laws, rules, codes and standards resides with management and the board, it is the role of the Compliance Officer to assist them in discharging these responsibilities by facilitating the development, establishment and maintenance of an efficient and effective compliance risk management process.

The risks faced by an organisation may, inter alia, consist of operational risk, market risk, credit risk, but will include compliance risk which comprises regulatory and reputational risk.

Regulatory risk is the risk that a business does not comply with regulatory requirements or excludes provisions of relevant regulatory requirements from its operational procedures.

Reputational risk is the risk that the business might be exposed to negative comment and opinion due to the contravention of applicable regulatory requirements. This can occur through negative publicity, public sanction by regulators or by word of mouth on the part of staff, competitors, customers and other stakeholders.

The Compliance Institute originated in the financial services industry, which has regulated requirements for the establishment of an independent compliance function and/or the appointment of a compliance officer. However, the ever increasing importance of compliance has seen more and more organisations from a wide variety of industries proactively appointing a compliance officer.

How do I become a Compliance Officer?

Prior to the introduction of Regulation 47 (now Reg 49) of the Banks Act, compliance was often perceived as the responsibility of the company secretary. Subsequently, however, more and more Compliance Officers have entered the profession from the legal and accounting profession.

Historically, the preferred qualification for a Compliance Officer was an accounting or legal degree. This, however, has changed considerably with the introduction of the Compliance Institute's Occupational Qualification for Compliance Officers and the professional designations : Compliance Practitioner and Compliance Professional.

One of the critical success factors for a Compliance Officer is a sound understanding of the business and therefore the relevant experience requirements are equally as important as your qualifications. It is therefore recommended that you enter the compliance profession once you have gained relevant work experience.