Individual Accountability for Regulatory Compliance.

Individual Accountability for Regulatory Compliance.

This MPG article illustrates recent changes to regulatory frameworks for financial services firms in a number of jurisdictions, which have focused on establishing individual accountability and mitigating the risk of control failures. Legislative landscapes (for example, in the UK, Australia and Hong Kong) have shifted towards increased liability of senior managers as a means to reduce regulatory breaches and other misconduct, improve ethical culture in the organization and enhance compliance. While the spotlight is on individual accountability as a means to counter the ambiguity around who exactly can be held responsible for breaches, the process for implementing these new requirements entails a review of a firm’s broader governance structures and processes. While the new obligations set out prescriptive standards that improve consistency in application across the sector and curb company discretion, the question of how such rules and procedures are to be effectively implemented is entity-specific. Thus corporate governance policies, reporting structures, management information, and more broadly work processes and procedures, will require review and adjustment to ensure compliance with new accountability regimes.

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