‘Tone at the Top’ Emerges

Terry Flanagan

Tone at the top is emerging as a key focus for regulators and financial firms, with roughly half of respondents (48%) reporting a “tone from the top” communication implemented in 2014, according to the Thomson Reuters Conduct Risk Report 2014/15. Nearly 40% of firms surveyed said there has been implementation of new policies and procedures and nearly 32% have undergone training to address conduct risk.

“The most critical thing of all to protect firms is that they need to be able to evidence that they’ve done the right things in the right way,” said Susannah Hammond, senior regulatory intelligence expert at Thomson Reuters. “It is absolutely the biggest waste of time, space and money if you put tons of money into doing the right things in the right way, but if you can’t then prove it to yourself and the regulators, your shareholders, to whatever other stakeholders you have, it’s wasted effort.”

Conduct-risk expectations “are actually being hard-wired into a lot of MiFID,” said Hammond. “Expectations around how a firm deals with governance are not only being prescribed, but the implication for firms getting it wrong and the individuals in the firms for getting the product wrong are much more profound.”

According to a recent Thomson Reuters 2014 Cost of Compliance Survey, compliance professionals spend on average 10 hours per week collecting and analyzing regulatory developments from multiple sources. “As the past year has shown, regulatory requirements are continuing to increase in both quantity and complexity,” said Peyman Mestchian, managing partner at Chartis, in a release. “Organizations are always looking, but more so today, for new ways to easily monitor and anticipate risk.”

Thomson Reuters has launched Accelus Regulatory Intelligence to provide access to coverage from over 570 regulatory bodies, 1,000 rule books, content from news, analysis, regulatory events, and practical guidance, the company said.

“The consequences of non-compliance, including both personal liability and reputational damage for an organization are becoming more severe,” said Andrew Neblett, managing director of Enterprise Risk Management at Thomson Reuters, in a statement. “As regulations continue to mount, clients need a solution that enables them to quickly and effectively monitor regulatory changes that will directly impact their organizations.”

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