Elevating Compliance is Key for Financial Services

Less than two years later after agreeing to resign from HSBC, John Flint, the former chief executive of the multinational firm, had some interesting remarks at an International Compliance Association event, reported in the Compliance Week on May 7.

Flint opened The Big Compliance Festival 2021 this year with his keynote speech on “elevating compliance within the business”. He was certainly accurate in commenting that the profession has made strides and must continue to do so to meet emerging challenges, although some of his comments appear to be out of date with the realities of 2021 and beyond.

When asked about detecting red flags during these dynamic times of increasing regulation and advances in tech, Flint was absolutely correct in sharing that “working harder very rarely solves that kind of challenge. You have to work smarter.” Advancements in the use of artificial intelligence, machine learning and blockchain technology in risk and compliance have automated numerous manual and semi automated tasks, revolutionising day to day and ongoing compliance functions, across the globe.

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Flint also commented that “there is ample evidence that if any firm in financial services doesn’t live up to the expectations of society at large, then there are very real consequences.”  In an ideological world, this would be true. However one must simply read the headlines to see how many large, financial institutions get away with monetary penalties after failing to abide by applicable regulatory requirements. Recent headlines in the UK could change this tide, however time will tell if a big bank finally faces real consequences.

Flint appears to be removed from the fact that the responsibility of agility in these evolving times does not lie with Compliance alone. Within the organisation, senior management and the board should be held accountable and outside, the regulators. Amusingly, when speaking about communicating with the boards, he stated:

“Getting the precision of the words and the tone right is important when communicating with boards…because how you communicate an issue can make a very significant difference to the amount of energy that is brought to bear in its resolution.” He adds that “…when they are hearing a piece of information, the first calculus each board member will always do is: What does this mean for me? What does it mean for my workload, my reputation…not because they are particularly selfish…because they are human.”

Now any compliance professional can attest that the tone of a culture of compliance must come from the top.  Flint himself contradicts this statement in his keynote where he stated “Society’s expectations are that financial services—and those of us working in the sector—must maintain high standards.” It may be unclear what exactly Flint deems integral to elevating compliance within the business, however I certainly agree that “…there is going to be some amazing, meaningful work to be done, which, if done well, will have a positive impact on the lives of a lot of people.”

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