YOU CANNOT JUST SET UP A FUNCTION , YOU NEED TO CLEARLY COMMUNICATE , ON AN ONGOING BASIS , WHY THIS IS NECESSARY AND OF REAL VALUE TO THE ORGANISATION .
DAVID HAYLOR , DIRECTOR , INTERNAL AUDIT CONNECTIONS taken into account when hiring the new head of department .”
Taylor concedes that organisations with no prior audit / risk teams may feel uncomfortable with the costs involved ; such teams aren ’ t income generative and it is often very hard to quantify success . However , he warns that the regulatory fines , reputational cost and share price impact will dramatically outweigh the cost of a quality audit and risk team when something does go wrong .
There are limitations to the EC recommendations .
Ralph Achkar , capital markets product director at Colt , explains
that for some of the technical aspects , the MiFID II recommendations fall short of covering the full scope of implications and the implementation challenges .
As such , when implementing some of these technical solutions , firms are left with different interpretations of the regulation and uncertainty of the appropriate solution .
“ For the non-technical aspects , the recommendations are in some cases rules-based and hence there could also be different behaviours that will fall outside these rules and would require further legislation going forward ,” he says .
“ Overall , the delays incurred to clarify rules are causing extra strain on firms building or looking for market solutions to the new requirements . These are solutions that require some time to consider and implement . Conversation between participants and their service providers to find efficient
OVERALL , THE DELAYS INCURRED TO CLARIFY RULES ARE CAUSING EXTRA STRAIN ON FIRMS BUILDING OR LOOKING FOR MARKET SOLUTIONS TO THE NEW REQUIREMENTS .
RALPH ACHKAR , CAPITAL MARKETS PRODUCT DIRECTOR , COLT ways for complying also take time to put in place . The delay in bringing these rules into legislature means that the time for firms to comply is greatly reduced , putting unnecessary pressure on market participants .”
Stuart Campbell of Protiviti argues that while the way the ESMA guidance is interpreted and enforced by regulators and firms will vary , UK regulators have been fairly consistent for many years in their general approach to the independence of compliance and ensuring its objectivity .
He adds : “ Based on discussions with my clients and contacts , it seems that the FCA is pushing some firms ’ compliance functions to improve their objectivity by handing over certain tasks to business areas .
The tasks include responsibility for handling complaints ; managing training & competence records and assessments ; undertaking quality control over suitability assessments .
The argument being that it is not possible for compliance to objectively monitor these processes if it is itself involved in the process .
“ Nevertheless it is not straight forward to have a complete separation . For instance , is compliance ’ s role in a significant business change project threatening its objectivity or adding to ensuring the effect of the change meets regulatory requirements ?
“ It is harder to opine say on difficult decisions concerning client on-boarding to meet AML and Sanction requirements or in meeting regulatory requirements and expectations in marketing material for new products .” l
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