I received some thoughtful feedback about my recent posts on integrating compliance effectively with a customer-centric organization.
This one makes some excellent points about the role of government regulators and industry self-regulators in communicating clearly to the public.
Very interesting, but despite what you might be tempted to conclude from brief presentations at a seminar, all the compliance officers I know recognize that they work for businesses that have to cater as far as possible to customer needs and preferences. Nonetheless, financial institutions are subject to numerous regulations (not just anti-money laundering) that have accumulated over the years and tend to make the account opening process complicated and cumbersome, and they tend to object just as much as many customers do. The Canadian Securities Administrators and self-regulatory organizations are currently looking at the account opening and disclosure requirements in the securities industry to try to make them simpler and more meaningful.
Building a compliance culture does not mean that compliance runs the show, nor is it incompatible with or a replacement for building a service culture. It simply means that a company and all its employees make understanding and abiding by the rules under which they operate an integral part of the way they do business. A compliance culture is truly successful only when it is well integrated with business processes that fulfill business needs, which ultimately means meeting customer needs. If compliance and business requirements are at odds, the inevitable result will be one side suffering at the expense of the other. Getting the balance right isn't easy, but good compliance people know that that is the goal.
Fulfilling the anti-money laundering and terrorist financing requirements does not require that customers or potential customers be treated as as if they were criminals or suspected criminals. No financial services business will survive for long doing so. On the other hand, some customers think that providing information that financial institutions are required by law to collect is an invasion of their privacy, done because the financial institutions are nosey or want to market other services to them. While the latter is generally true, the rules in this regard are established by governments and not financial services providers. Governments decide the balance between social requirements, such as the need to fight crime, and individual rights like privacy. It should not be forgotten that part of the balance involves restrictions on what financial institutions can do with the information they have to collect for other purposes.
While financial institutions could in some cases do a better job of educating customer or potential customers, not to mention their front-line employees, on the reasons for their collection of some items of information and the identity verification procedures customers must endure, it'is not uncommon for customers to be distrustful even when provided with that information. The IDA is preparing a brochure that Members can provide to customers explaining all the requirements to which the Members are subject when opening accounts. It's too bad that governments are generally unwilling to help explain to consumers that many of the things they object to are mandated by laws or regulations and to provide the relevant rationales.
It's nice to know that there are smart and articulate people working on these things, isn't it? Thanks for the feedback.
