Financial services industry falls short on compliance

Theimplementation of compliance programs by Australian financial services companies are being hindered by a lack of resources, the perception compliance is not core business and management resistance to compliance initiatives, anErnst & Youngsurvey has revealed.

Sixty-one per cent of respondents to theNational Legal ComplianceSurveycited lack of resources as the main obstacle to implementation of an effective program, while 39 per cent indicated that legal compliance was not considered core business despite the looming March 2004 deadline for attaining a licence under the Financial Services Reform Act (FSRA).

The survey was based on the Australian Standard 3806-1998, which according to the head of Ernst & Young’s compliance advisory practice, Lucienne Layton, “is increasingly recognised as the starting point for implementing an effective legal compliance program”.

Other findings in the survey included the revelation by 45 per cent of respondents that compliance procedures were not embedded into operational procedures and 42 per cent revealing that lack of staff understanding was an issue.

Layton also noted that there was still a large proportion of management and staff in the financial services industry (24 per cent) that demonstrated resistance to the implementation of legal compliance programs.

Additionally, and despite 95 per cent of respondents revealing they had a dedicated compliance manager, the survey hinted at a general lack of board-approved compliance documentation, as 61 per cent of respondents did not have board-approved compliance mandates and compliance policies.