By Chude Chidi-Ofong, Advisory Board member, My Compliance Centre
The old adage – ignorance is bliss – couldn’t be further from the truth when it comes to financial services compliance. This is thanks to recent regulatory shifts that mean individuals within businesses face personal accountability when things go wrong.
The days of saying “well, yeah, my bank lost half a billion in derivatives, but it wasn’t me” are long gone. We now live in a world where, if it’s your name above the door, you’re the one the regulator is going to come for.
And while it should be said that most enforcement action still results in sanctions against firms, initiatives such as the Senior Managers and Certification Regime (SMCR) demonstrate how both the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) are willing to fine and publicly name senior managers where personal failings contribute to serious breaches.
To give an idea of the scale of the risk, in the 12 months to March 2025, the FCA issued 37 final notices, secured five criminal convictions, imposed fines of over £186m and cancelled the authorisation of 1,456 firms.
Consequently, compliance is no longer seen by the C-suite as a necessary evil. Instead, it has become a strategic function with a critical responsibility for protecting both professional and brand reputations.
Why a ‘nothing to do with me, guv’ approach won’t wash
This move towards personal accountability means that leaders need visibility and assurance that risks are being managed effectively – by a proactive and insights-driven team. Conversely, inefficient compliance processes can act as a significant drag on business performance and scalability.
Indeed, manual, spreadsheet-based systems are prone to error and struggle to keep pace with growth, creating bottlenecks that can hinder revenue generation. For example, slow onboarding processes due to cumbersome compliance checks can delay the acquisition of new clients and assets.
Perception matters: how vendors, brokers and investors might react
In today’s interconnected world, news of compliance failures travels fast, and the resulting stigma can be toxic to a business.
Compliance failures create a toxic stigma that can kill a business by association; vendors or prime brokers may simply refuse to deal with the firm due to reputational risk.
Investors are also increasingly scrutinising compliance capabilities during due diligence. An inefficient or outdated compliance function is viewed as a red flag, indicating broader operational weaknesses.
If someone looks at your setup and the compliance infrastructure is found wanting, this could count as a mark against your business. If that person were an investor, it could lose you the potential investment; if that person were a key vendor or counterparty, it could deprive you of a strategic relationship; and, if that person were the regulator, it could place you under greater scrutiny with a need to pursue remedial action. All of which give the appearance of an analogue operator struggling to keep up in a digital world.
Alongside this, a firm’s ability to demonstrate robust compliance processes can significantly smooth the path to securing investment. This is something I’ve experienced personally when a demonstration of compliance capabilities expedited a large allocation from a major investor.
The only game in town: a proactive mindset supported by modern tools
To successfully traverse today’s personal risk-laden regulatory landscape, firms must look beyond outdated manual processes and embrace technologies that automate tasks, improve data visibility and, perhaps most importantly, provide a robust audit trail.
These capabilities enable senior managers to demonstrate compliance to regulators and investors alike – thus removing any temptation to plead ignorance when the watchdog comes knocking on your door.
