Are You putting Your Business at Risk with inadequate Compliance Controls?

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History is littered with spectacular compliance failures; from Eron to WorldCom and the shocking findings of Australia’s recent Banking Royal Commission. And yet, we can expect more compliance failures to come. Which begs the two questions- why is that and what can be done about it?

In reality, compliance is often seen as an afterthought by business leaders and founders. While founders want to grow innovative and successful businesses, the truth is that a founder’s first priority should be not just building a great company, but on building a great company that can last.

Compliance is Critical to the Longevity of a Business

While regulation and compliance don’t exactly scream “sexy,” they are crucial to the longevity of a business [for an interesting article on how to make compliance more engaging, click here]. Compliance failures threaten a business’ bottom line. They hurt the reputation of a business, especially when they are (or appear to be) intentional.

A compliance failure can result in fines, penalties, and other monetary damages. It can also result in jail time for executives and employees.

In addition to monetary damages, a compliance failure can also result in lost customers, lost revenue, and lost market share.

Step One: Start by writing it down

The most effective way to avoid compliance failures is to plan for them. This is not to say that every business needs a 100-page “compliance plan.” But, a business does need to have a compliance program, a document, or a set of documents that describe how the business will comply with applicable laws, regulations, and industry standards.

Obviously, the size and complexity of a compliance program should reflect the business and the industry in which it operates. For example, a business operating in a highly regulated industry such as energy retail or financial services requires a much more in-depth compliance program than a food delivery business.

Step Two: Meet and Improve

Then on an ongoing basis, a business should review its compliance program in formalized compliance meetings and consider two critical questions:

a) are the controls in place adequate; and

b) what has changed in the business and regulatory context that requires further action.

The act of scheduling, completing, and documenting compliance meetings is a very powerful step that a business can take to comply and survive in the long term. You can read more about the ingredients of a successful compliance program here.

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The two initiatives above were cited as examples in the press release on 28 September 2021. There is very little information available as to what other initiatives will be forthcoming.

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On 8 October 2021, the Australian Energy Regulator (AER) announced that, in response to an investigation, Alinta Energy have substantially improved its systems and was waiving more than $1 million in energy debt owed by more than 400 of its customers.  The outcome arose as a result of an investigation carried out by the AER into alleged non-compliance with Alinta Energy’s obligations with respect to vulnerable customers and its hardship program. The AER was concerned that during the period September 2019

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