Demonstrating compliance effectiveness a top priority

71 percent of banks, 72 percent of insurance companies and 84 percent of other financial services organizations believe that demonstrating compliance effectiveness is a top priority, according to Compliance 360.

With the majority of organizations citing the Dodd-Frank Act as the reason for this prioritization, the survey illustrates the high-level of importance placed on establishing effective compliance procedures within the financial services industry.

To help prevent fraud by strengthening oversight, the Dodd-Frank Wall Street Reform and Consumer Protection Act is bringing major changes to the financial services industry. Rather than just providing evidence that compliance programs exist, organizations will need to be able to show proof that their compliance programs actually work.

While many of the regulations stemming from the Dodd-Frank Act are still taking shape, the SEC’s Whistleblower Program is a good indicator of the greater regulatory scrutiny to come. The provision, enacted in May 2011, monetarily rewards people who proactively provide the SEC with information about violations of the federal securities laws.

The SEC has established a framework for evaluating cooperation in determining whether and how to charge these violations, including the potential for reduced sanctions for organizations that have established effective compliance procedures.

Financial services organizations understand the need for compliance strategies and solutions that will help them enhance employee relations, identify gaps, remediate issues and demonstrate compliance effectiveness.

The survey was conducted among compliance professionals in organizations, including banking (traditional banking, lending), financial services (brokerage, investment and wealth management) and insurance (life, property & casualty).

Detailed findings include:

  • 71 percent of banking, 84 percent of financial services and 72 percent of insurance respondents cited demonstrating compliance effectiveness as either “our #1 priority” or “one or our top priorities.”
  • For banking and financial services, the top reasons for this prioritization were “increasing regulatory focus from the Dodd-Frank Act” (52%) and “pressure from regulators or external auditors” (48%).
  • Insurance respondents cited “pressure from internal audit” (50%), “market conduct exams” (45%) and “pressure from regulators or external auditors” (45%) as the major reasons spurring compliance effectiveness.


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