Choosing a compliance management system

Ben Mason

18 May 2021

There are many issues to consider when buying a compliance management system. Many compliance departments will be purchasing a system for the first time and may not have had a chance to think through the full implications of their decision. Our 10-point guide has been designed to help.

1. Mirrors your compliance activities 

There are fundamental differences in compliance management systems that are designed by experienced compliance professionals to those that are not.  All too often we hear comments such as “we have looked at systems that are technology trying to be compliance” or “I wanted to understand how the system worked but found it difficult as I was asking questions about compliance to technology developers”.

Ideally, the designers of compliance systems should be compliance professionals with a deep domain knowledge of the real-world challenges faced by compliance officers. When you review a compliance management system, it should align with your view of compliance and the challenges you face on a daily basis. In other words, does the system reflect the activities that you carry out daily and how you spend your time?  Or are there significant gaps in the support it offers?

2. Reduces Excel worksheet and e-mail use?

One of the most significant compliance challenges for financial institutions is the time their highly skilled compliance teams spend carrying out routine administration, due to the inadequacy of their management tools. 

Quite simply, a compliance management system should substantially reduce routine administration, enabling you and your team to spend more time on value adding activities. For example, if managing your compliance monitoring Excel worksheet is one of the things that takes most time then it is vital your compliance management system minimises that burden. If tracking and managing regulatory developments takes up considerable time then, similarly, your compliance management system should make that easier.

3. Comprehensive reporting options

Management reporting is a key feature of any management system, but this can mean different things to different people.

Some simply want to export data to Excel and manipulate it themselves or to run pre-defined reports in PDF format. Others may simply want to pull data into their own data warehouse, for example using an API connection, or have a high-level dashboard view of key indicators.

Whatever your reporting preferences, now and in the future, your management system should support it.

4. Supporting investigation by regulators or internal audit

Delivering confidence to a wide range of stakeholders is one of the ongoing challenges for all compliance functions.  Whether it is your board, risk committee, ExCo, internal auditors or regulators themselves, you will always want to convey that you are in control.

Your compliance management system should enable you to demonstrate your control over key compliance processes and activities, allowing you to see your compliance status in real time and to evidence activities. 

5. Offering value to other business functions

The primary role of a compliance management system is to automate primary compliance activities.  However, given the nature of compliance and the challenges of gaining management support and budget to invest in a system there is a broader question to be asked. Does the complance management system add value to a broader range of stakeholders? Is it visible and seen across the company as a key management tool?

Examples of how this might happen are numerous:

  • It could be through the automation of governance processes which benefit members of all boards and committees. 
  • You may have quality control processes (such as client file reviews) carried out by the first line and reviewed by the second line. Automating this task using a compliance management system could save everyone time and improve the viibility of information.
  • Your compliance monitoring system might also support the company’s wider assurance programme, offering better control of internal audit and risk assurance processes.
  • A good compliance management system may help senior managers who are subject to the Senior Managers Regime to feel more supported in executing their Senior Management Functions. 

Each company will be different, but, in all cases, the benefits of compliance automation should be clear for more than just the compliance department.

6. Enabling app integration

There are 650 regtech vendors in the UK offering a range of different solutionsand it is impossible to select a compliance management system that is fully integrated with all the various apps on offer. It is therefore critical that your chosen system is ‘API enabled’, meaning that it has the flexibility to integrate with any other API enabled systems, should you need to, today or in the future.

A further consideration is the system’s integration with external data sources, and specifically regulatory change data feeds. 

7. Easily customised

It is critical that your compliance management system can be cusrtomised, for example:

  • Are all employee and compliance team notifications flexible in content?

  • Does the system tie you to any given consultant’s policies?

  • Will the system automate management of your compliance monitoring programme - and f important your internal audit and/or risk assurance programmes?

  • Can you configure your wider group and internal company into the sub-groups and teams and ensure data security between teams?

8. Positive vendor experience

Once implemented, you will hopefully be tied to your compliance management system for some time. You need to be sure that you trust the vendor to provide the right level of support to you and your team ?  Do they listen and communicate quiickly and effectively?  Do they have a solid understanding of the real-world challenges of a compliance department?  And, as the automation of compliance management is still in its infancy do they have the commitment, vision and knowledge to adapt as regulations and technology evolve?

9. Purchasing options should allow comprehensive evaluation

Sometimes, when evaluating a system, it might be obvious that it is exactly what you need. On other occasions, the benefits might not be so obvious. 

To fully understand a system, you should be able to engage in a number of different evaluation activities.  These might include a system demonstration to you and other senior management colleagues and team members or going futher and taking a “test drive” or carrying out a formal pilot or proof of concept.

It is critical to fully understand what you want to get out of a system and how the system will deliver that in advance of making a full commitment to any given platform, and your purchasing process should support that principle. 

10. Simple implementation

Having selected a system, you need to know you will be able to realise its benefits quickly.  Implementation should quick and simple, with the support you need to implement with a minimum level of disruption.

Talk to your supplier about their approach to implementation and get a feeling for how onerous it will be to achieve the benefits you expect.

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