Compliance officers identify and analyze the laws and rules a financial institution must observe and prevent consumer harm. This role sometimes puts compliance officers in one corner and the business units responsible for opening accounts or offering products and services in another.
This is wrong. Compliance should never be viewed as an adversary.
For compliance to be viewed as a helpful resource that provides valuable business advice, compliance must foster positive working relationships with employees, supervisory/audit committee members, auditors, and examiners. It’s also important for compliance officers to establish a good working relationship with the board and senior management.
A compliance officer’s authority is derived from the board, which is ultimately accountable for implementing an effective compliance management system. Compliance officers that don’t have access to board members through committees, board meetings, or training may find it difficult to lead within their institution.
Related: How to Address Risk, Compliance and Audit Issues with Your Board
To get to the board, compliance officers may have to convince senior management of the benefits. As the Consumer Compliance Outlook puts it, “[i]t may therefore be beneficial for the compliance officer to remind senior management of the importance of an independent and well-supported compliance function.”
A compliance officer’s relationship with senior management and the board is essential to securing “a seat at the table” and the ability to offer insights early during discussions of new products, technologies, and delivery strategies.
Ensuring the compliance function has a sufficient budget for an effective program is also helpful. Some of the most successful compliance officers have convinced business units to add a compliance budget carveout to new initiatives (such as a new product or fintech relationship) to allow the compliance program to scale and grow to meet institutional objectives, instead of a siloed budget process compliance must undertake alone.
For those collaborative relationships to thrive, compliance officers must brand themselves as a resource, not an extension of the regulator’s enforcement power. Compliance officers should consider what information is most helpful to the board or senior management to allow them to govern with the necessary oversight without overwhelming them with less relevant details.
Examples include:
Compliance officers can be quick to wield the stick instead of offering the carrot. If you create an environment of trust and not one of fear and punishment, business units will be more willing to discuss their ideas and ask questions proactively.
One respected compliance officer Stephanie knows has weekly lunches to build relationships with business units. She brings concerns and issues to managers as opportunities for improvement they can work on together and celebrates the business unit’s staff when they have few or no compliance deficiencies and complete assessments promptly. When business units see the compliance officer as a peer, they are more likely to support their initiatives and listen to their advice.
Another upside to connecting with other business lines is the opportunity to identify individuals with the potential to become great compliance officers.
This has two benefits. It helps you fill a role quickly while promoting a culture of compliance from the ground up.
For example, a compliance officer notices a stand-out loan officer whose lending documentation is the gold standard. She uses the institution’s compliance checklist as she moves through the loan process to ensure everything is done well and holds co-workers accountable when loan files do not include a completed checklist.
Throughout their working relationship, the compliance officer provides the loan officer with lending compliance resources to expand her learning and, using some of the compliance budget to increase her salary, gives her additional loan review responsibilities. When mortgage refinancing slowed down and the institution had to lay people off, the loan officer was able to seek out a rewarding lending compliance role.
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