“A jack of all trades is a master of none, but oftentimes better than a master of one”
— Multi-disciplinary Mike
Where to start
Compliance isn’t easy. If it were, there’s be far fewer service providers and much less enforcement activity.
Just because Tom can (generally) spell “compliance”, doesn’t mean that he has any real understanding, or practical experience, to bring to bear to support his licensee as a Compliance Expert. Confidence, cricket anecdotes and a hearty bonhomie are not reliable indicators of required competency. In fact, if you’ve met business development managers, you know that the ability to speak confidently about a topic doesn’t actually reflect, or require, either insight or substance.
This is a significant (and developing) problem for many self-licensed businesses who need to engage, or employ, people to help them navigate the grey and comply with the financial services laws. Unfortunately for these licensees, getting it right requires them to select compliance staff with the proper mix of comprehension, commerciality, doggedness and imagination. That’s easier said than done; You may recall that Commissioner Hayne highlighted numerous examples of “compliance-focused” managers who were so obviously out of their depth that their contribution made everything worse for their licensee.
It may be as difficult to weed out dodgy and incompetent “compliancers” as it is to weed out dodgy and incompetent advisers, but the difference is that financial advisers have a well-understood path to competency; a cocktail of knowledge, skill and experience centred around common subjects and shared norms.
It’s not the same for compliance experts. Some have embraced the strategic management discipline intentionally (starting from law or advice) others from convenience or desperation, some from opportunism (“compliance is the new oil”) and others on the basis of unfounded confidence and entitlement. Many have simply ended up in compliance through indifference and a bizarre coincidence of events.
The reason this is important to think about is because compliance roles are multifaceted and complex, requiring a deep understanding of various psychological, legal, and management principles. Unfortunately, there’s not a clear or consistent development framework for new compliance officers. This means they largely have to learn from experience (and learning from experience can be both painful and costly).
We want to help and because of our experience and rich data set (encompassing both Licensee Reviews and over 18,449 client file reviews across 206 Licensees) we think we’re well-placed to do so. Although this topic may only interest Responsible Managers, Licensees and Compliance nerds, this article will be the first in a series of comprehensive guides designed to equip new compliance staff with the practical knowledge and skills they need to excel.
“I can tell you I don’t have money, but what I do have are a very particular set of skills, skills I have acquired over a very long career, skills that make me a nightmare for people like you.”
— File Reviewer
Don’t tell anyone, but if you’re going to succeed in Compliance, you’ll need more than a black suit, red pen and a checklist.
That might be enough to get a job, but it won’t make you either effective or competent.
It certainly won’t increase your value to potential employers.
A good compliance person is both a generalist and a specialist, versatile and adept at a number of things and nerdily obsessive over a few things.
We want to help you become a well-rounded compliance expert.
We’ll leave the deep-subject matter specialisation aside and, In the following weeks, we’ll deep dive into the generalist areas. For clarity, these will be:
Compliance, like criminology, requires practitioners to focus on conduct and context and develop a solid understanding of human behaviour. In short, Compliance officers need to be aware of common heuristics and cognitive biases such as the availability, familiarity, representativeness, affect, anchoring, and scarcity heuristics (which often lead to, and explain, poor decision-making). In the first article, we’ll explore these heuristics and provide some real-world examples of how they can impact decision-making in a compliance context.
To be effective, you’ll need to understand the role of the Australian Securities and Investments Commission (ASIC), the difference between common law and statutory law, and the key sections of the Corporations Act. The second article in this series will provide a more detailed overview of Australian law, offer some specific examples of how common law and statutory law overlap, and explain how ASIC interprets and applies the law.
Compliance is not just about adhering to laws and regulations — it’s also about adding value to the business and recognising the opportunities that others see as impediments. Too few compliance people understand that compliance is a creative and commercial discipline. In my view, Compliance officers need to understand how to position compliance as a value-add to the business and a source of competitive advantage. The third article in this series will address some of the key management principles, and highlight some case studies of businesses, that successfully positioned compliance as a value-add.
New compliance officers often start by reviewing advice files and providing feedback and considered opinions. This often involves confirming that the advice was appropriate, considering whether any advice to replace an existing product was justified and properly documented, and assessing whether the proper disclosures have been made in relation to remuneration and conflicts of interest. The fourth article in this series will provide a step-by-step guide to conducting an adviser review, with specific examples and scenarios.
I want to be clear with you, regardless of your experience or competence you will, from time to time, endure personal challenges such as having your conclusions downplayed, dismissed or disregarded. The fifth article in this series will delve deeper into these challenges, providing real-life examples and detailed strategies for overcoming them.
Becoming an effective compliance officer demands understanding psychological, legal and management principles but it also requires a consistent and considered lens through which these principles are viewed. The sixth article will explore strategic approaches that can help move compliance from a “tick the box” exercise to adding real value for businesses.
The final article in this series will provide new compliance staff with a detailed 28-day plan that will provide you with a roadmap that includes specific tasks, goals, and learning resources for each day.
Becoming a highly effective compliance officer is a journey that requires a specific body of knowledge that is only often amassed as a result of bitter experience.
We’re trying to help new entrants to understand the building blocks for a successful career in compliance and avoid some of the painful lessons others have experienced.
Stay tuned for the first article in the series, where we will delve deeper into the psychological principles that impact decision-making in compliance.