Crises of culture
Recently, The Economist Intelligence Unit (sponsored by the CFA Institute) published A crisis of culture: Valuing ethics and knowledge in financial services.
It's interesting reading and a worthwhile investment of your time particularly when balanced with the results of the 2013 Edelman Trust Barometer, ASIC Commissioner Greg Medcraft's exhortation to financial advisers to restore "trust and confidence" and, closer to home, with New South Wales Court of Appeal's decision in Commonwealth Financial Planning Limited v Couper  NSWCA 444.
(Couper has been addressed elsewhere on this site but it's worth recognising the case as a cultural failure rather than a compliance failure.)
The Economist's report noted that while industry executives "champion the importance of ethical conduct, but they struggle to see the benefits of greater adherence to ethical standards".
So what is it about financial services that leads more than half of survey participants to qualify their belief that "ethical conduct is just as important as financial success at their firm" with an acknowledgement "that strict adherence to such codes would make career progression difficult."
The brutal reality for any Compliance Manager is that your compliance arrangements are doomed to failure where they are not effectively supported by executive leaders and aligned to the cultural values of the organisation (or vice versa).
Nor will they succeed if they are not substantively embedded within the sales and business processes, KPI and line management measures.
(This is, I think, precisely the point made by Peter Kell (ASIC) when he frames the CFP Enforceable Undertaking by talking about leadership, remuneration and structure.)
When 53% of officers believe that strictly adhering to ethical codes will hamper their career progression, how will this affect their approach to compliance?
More importantly, how will it affect their decision making processes and the culture they create with their team?
In practical terms, how does a Licensee's rhetorical "commitment to compliance" work when it's incrementally and inevitably eroded by real world concerns about one's employment, mortgage and career?
This is the real challenge for compliance professionals - but while one might recognise the Compliance Manager's role as one of "cultural and process change management" do most Compliance Managers really have the insight, skill, support and influence to drive and sustain cultural change in the face of embedded conflicts?