In providing legal, regulatory and compliance services, we see a variety of approaches towards compliance and enable clients to outsource compliance to varying degrees. This article is not intended to argue the overall culture a business should create around compliance (we did that in a fantastic recent article – click here) but investigate some of the options for how a company can resource and manage compliance.
By Stephen Findley, Relationship Manager, Compliance Quarter
Broadly speaking, a company can operate its compliance management in three ways:
- Fully in-house – Source, hire and build a team dedicated to compliance
- Fully outsourced – utilise an individual, team or company of outsourced professionals
- Blended solution – combine in-house and outsourced
And the choices here can often come down to the preferences and experiences of the individuals involved, in addition to the position of the company in question.
Outsource Compliance – The Startup
The start-up company might be more likely to consider outsourced or a blended solution to bring in expertise on an ad-hoc or part-time basis to match cash flow considerations. We’ve worked with a number of startup electricity retailers where they’ll combine our services with a board member, usually general manager or an operations director to blend the compliance workload – and we have developed software tools to help make this a seamless process.
Outsource Compliance – Growth and Expansion
As a company grows, it will usually hire more staff and acquire more customers. This generally leads to increased risk and the compliance spend/function should grow accordingly. We’ve helped some of our clients to identify and hire compliance staff in addition to providing training and helping them to manage the transition to in-house. Some companies will grow to a size beyond our capacity and it is in the interest of both parties to communicate this accordingly. A responsible compliance outsourced function should be upfront about this, the long-term negative effects far outweigh the short-term benefits of maintaining revenue.
Where geography allows we have also provided part-time in-house services to complement the work we do from an outsourced position and this sits well with certain clients looking for a regular personal relationship.
Compliance Technology & The Blended Solution
Technology is also lending a hand rapidly. With the developments in software, companies no longer need to rely on binders full of documents or Excel spreadsheets. Our work with financial services companies and energy retailers has been about using technology to increase the efficiency in compliance and the benefit for companies is that it will reduce the overall costs of compliance whilst also reducing the risk when managed correctly.
The blended solution doesn’t always refer to the staffing approach entirely. An employed compliance manager using dedicated compliance software could be considered a blended solution that reduces some of the risk by allowing the company to take advantage of software solutions that are tried and tested, plus come with support. Plus all of the documentation and management of compliance does not need to sit with one individual – good software can provide reports or update a board on the work being done in compliance and help make transitions smoother.
Our online solution to help companies – the Compliance HUB
At this, and indeed, anytime compliance could be kept outsourced. Companies might like an outsourced function that relies on the expertise of a team as opposed to relying on one or two individuals. In some instances, it could be the cost and risk associated with hiring full-time employees – with the alternative option the company does not have to worry about holidays, sick pay and the associated costs and mechanisms in place to provide cover during these periods.
If your GM has a strong compliance background and your company is small, then they may be able to effectively manage compliance with the support of some good software or regular access to regulatory experts. However, this might not be adequate and taking the time to assess your compliance requirements regularly is at the heart of taking a flexible and pragmatic approach.
With much of the world considering or using outsourced services, it is crucial to select the right vendor to provide support – the reputational risk and fines will likely far exceed the cost if something is not done correctly and compliance culture is something that has been covered through the Royal Commission, the Facebook/Cambridge Analytica data scandal and a host of other more localised stories.
Some of the best software as a service (SaaS) solutions come from times when a problem is set out, addressed and a fix is attempted. Context matters here and a compliance software solution should include the expertise of those with relevant experience.
There really is no right or wrong solution and it’s often the companies that do not apply due care and attention to this important aspect of their business that run into trouble. If you want to discuss the management of compliance within your business, click here to book a call with us or email the team by clicking here.