02 Mar 2017
Recent political changes are a catalyst for organisations to rethink their compliance frameworks. As we begin to redefine ourselves post-Brexit we are forced to scrutinise our rules and regulations and really question what is in the public interest.
The following insights were gathered during a recent roundtable, convened by RICS, which explored compliance culture and the public interest and included contributions, under Chatham House rules, from the media, academics, regulators, business leaders and policy makers.
Snapshot: What was discussed?
Christine Armstrong and Robert Phillips, Co-Founders of Jericho Chambers provide a debrief of the issues and topics discussed during the roundtable. (1min 30 secs)
Global companies and their approach to decision-making need to flex to meet the complexities posed by rapid international socio-political changes. However, complexity in regulation causes problems at almost every level; politicians find it difficult to engage in the level of detail that many industries require. Complexity at this granular level works counter to the public interest.
Regulation addresses the knowledge imbalance between provider and customer but how many of us really read and engage with pages of terms and conditions? Overloading users with information is frustrating and leads to inertia and an overly complex regulation framework hinders the public interest by discouraging the public from active engagement.
In short, organisations need to create clearer ways of providing complex information.
Cycle of Scandal
It used to be comply or explain but now it’s comply or else.
Trouble arises when compliance fosters a culture of knee-jerk reactions and blind adherence driven by fear and risk.
In the past, we’ve witnessed cycles of compliance; rules and regulations chase incidents of the past but do not deal with the failures of the previous policy.
We experience breaches, crises, a regulation backlash and a lot of hand-wringing and then the world continues until the next breach. Adding more layers of regulation rather than dealing with real issues is not the answer and often leads organisations to become risk averse.
Providing support to organisations and a focus on why policies have failed would help avoid repeating this cycle of knee-jerk regulation.
Role of the professional
What is a professional? The term implies vocation, ethics, trust, status and wealth and monopolistic practices. However, today the professional has been redefined to be someone competent who will go that extra yard for the client. Regardless of the ask, the professional will slavishly serve the client.
If professionals were solely committed to doing the right thing, perhaps there would be no need for regulators. However, as soon as you have this slavish need to satisfy your client you need a regulator to make sure you’re doing the right thing.
When you work for regulation [rather than for the customer] we’ve all lost the plot.
Doing the “Right” Thing
Excessive focus on compliance stops people behaving in the best interest of their customers.
Morality is something regulators will sneer at because they think there is no common good.
Good culture is formed by people doing the right thing and knowing how to do it themselves. This is a good guide to cutting through complexity.
It’s incorrect to say morality is currently absent in regulation. Fundamentally what exists is good people in systems who are trying hard to make these systems work. Regulators are caught within a system and, depending on the culture of that system, the pressure to suppress their values can be overwhelming.
Standing back from slavishly following rules and getting back to ethical principles allows regulators to galvanise the morality that exists in their organisations and bring it to the fore to the benefit of public good.
‘Compliance culture and the public interest’ roundtable was convened by RICS and Chaired by Jericho Chambers. It was the third in an ongoing series of roundtables exploring definitions of the ‘public interest’.
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