Company culture is crucial to avoiding regulatory problems, a survey by regulatory consultancy Kinetic Partners has found.
More than half (53%) of financial services senior executives said that culture was the most important factor to get right in order to avoid regulatory problems. Ensuring governance is a priority among board members – selected by 30% of c-suite respondents – was the second most cited.
According to Kinetic Partners’ 2015 Global Regulatory Outlook report, fewer than one in ten (9%) of senior managers put their faith in risk monitoring and compliance as the best way to keep their firms out of trouble.
Interestingly, no senior executives, and just 5% of others, considered finding staff with the right regulatory skills to be the most significant element for averting major issues. Furthermore, when it came to recruiting compliance staff, technical knowledge of regulations was considered the most desirable trait by 44% of all those surveyed (and 45% in the c-suite). This compares with 26% who cited practical experience in trading or operational roles and just 18% who prioritised leadership and management skills.
The survey also found that financial services firms could be leaving themselves exposed through a failure to invest in technological skills. According to the survey, just 6% of respondents believe that compliance system and software expertise are the most important skillsets when recruiting compliance staff.
Commenting on the report findings, Monique Melis, global head of regulatory consulting for Kinetic Partners in London, said: “The message is clearly getting through to firms that compliance policies and procedures aren’t enough to satisfy the regulators. They are looking for evidence of a change in the culture of the organisations, which is blamed for the financial crisis.”
She added: “Recent cases in the past six years have shown us that problems do not only arise from deficiencies in the compliance department. Often, it is the failure of a firm’s leadership to set clear expectations for the culture and related behaviours throughout the business that can have a more significant impact.”
Almost 300 financial services professionals took part in the survey.