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An overwhelmed compliance officer struggling with queries because they can't access the tools they need.
Admin01/07/22 00:00

Covid-19: Compliance officers overwhelmed with queries because front office cannot access self-service 'tools'

By Rachel Wolcott, Editor at Thomson Reuters

Compliance officers working from home are overwhelmed with queries from front-office staff who can no longer access the self-service tools they would normally rely on to navigate compliance questions.

There is a gap between the compliance team and the business team and that might [normally] be serviced by a PDF or a manual, said Alan Blanchard, head of UK business development at Zurichbased Apiax, a digitised compliance tool provider.

Many legal and compliance teams are completely overwhelmed with trying to produce legal opinions or carry out their compliance functions remotely, as well as responding to two to three times more queries than usual, Blanchard said.

Working from home has exposed pain points in many firms' manual compliance processes: for example, client onboarding, client assets, sales and suitability as well as overall policy management and access.

"Compliance as an analogue process wasn't fit for any crisis. It was fine being stuck together and made to work while everything was
normal, but crises are a fact of life. Now we've seen compliance can't withstand this level of disruption," Blanchard said.

Pivot to homeworking tough for compliance

When financial institutions switched to home working, many compliance officers and in-house lawyers were unable to access some of their files. Some institutions still had compliance and legal staff using desktop computers which could not be accessed remotely.

That had to be addressed as well, while many struggled with virtual private networks (VPNs) and remote working tools such as video conferencing. Some institutions just could not cope fully with so many people working remotely.

"Another thing we've seen is how quickly compliance and policy management departments had to adapt, make changes to their policies and communicate to employees. There were difficulties there because if that process is not streamlined then more questions come up from people who don't know what they're supposed to do. Questions come up from people looking for guidance. There was a lot of workload on compliance departments answering all of those questions and trying to come up with solutions very quickly. Because compliance is working from home, coordinating internally is a challenge," said Evgeny Likhoded, chief executive at Clausematch, a London RegTech that helps financial institutions and other regulated companies comply with their internal corporate governance documentation.

For the first few weeks of the crisis, many compliance teams were just trying to figure out how to cope. Now that adjustments have been made, people have more time to dedicate to their tasks and the new set of challenges they face, Likhoded said.

Client onboarding, management and communications

Firms that have digitised parts of their compliance processes can carry on without detriment despite having shifted to a business continuity footing, Blanchard said. Client-facing staff, for example, can carry on as usual, dealing with customers and assessing product suitability and other sales considerations in a compliant way. Some firms have begun to consider digitising more aspects of their compliance processes based on their experience responding to the pandemic.

"Generally, this new way of working highlighted a lot of problems banks had. What happens when you cannot onboard a client at a branch? How do you do that? Using a selfie [for client on boarding], we have instances where digital banks are already doing that, fully digital[ly] on boarding. There aren't issues there about how the on boarding is done. It's just bringing technology into the bank that is reliable for digital and remote on boarding. That is an issue for bigger banks. For the top-five banks in the UK, for example, it takes months to bring in that technology," Likhoded said.

Client on boarding is just one issue highlighted by the UK Financial Conduct Authority (FCA), however. The regulator has made clear its high expectations for regulated firms to maintain high levels of customer service and to ensure customers do not suffer detriment resulting from the crisis or mistakes made by banks during it. Some of these expectations will be tough to meet with a distributed workforce reliant on manual processes. For example, Client Assets Sourcebook (CASS) compliance will be difficult to achieve with a remote workforce and the FCA has set out some guidance to help firms cope.

"What we've seen is [that] those tools that enable digital collaboration, which enable remote working, remote on boarding, remote servicing of clients, these projects — and bringing in those vendors who can bring that technology — have been accelerated," Likhoded said.

This article was first published at Thompson Reuters.