Compliance made simple: Cutting red tape, not corners

Compliance might sound complicated, but it doesn’t have to be.

For many small licensees in the financial services sector, meeting regulatory requirements is a big concern. Often, these businesses see compliance as an expensive overhead and think they need to have long and detailed compliance policies like larger companies do. However, these fancy frameworks can be hard to work with and might not even do their job.

At MIntegrity, we’re experts in regulation, and we believe in keeping things simple. Here’s a look at what that means for compliance.

Starting with the basics

The Australian Securities and Investments Commission (ASIC) expects that your compliance arrangements align with the nature, size and complexity of your business. That makes sense, right? Your business isn’t the same as a giant corporation, so your compliance shouldn’t be either.

But we see it all the time: Small businesses think they need to go bigger, so they set up frameworks that are too complicated, too expensive and too difficult to use. Worse yet, after all that investment, they often can’t easily show that they’re actually following the rules.

We think there’s a better way — and it all starts with simplicity.

The first step is understanding your compliance obligations and what they mean for your business. Then, you need a clear plan to show you’re following those rules. The smaller your company, the simpler this process can be.

The value of a simple plan

Here’s how we see it at MIntegrity: The most effective compliance plans are straightforward. You could understand them at a glance. Of course, this doesn’t mean cutting corners or being less thorough; it’s about getting rid of unnecessary complications. Your biggest risks should command your most obvious efforts.

Remember, perfection isn’t the goal here. No one is asking you to reduce compliance risk to 0%. As long as your plan scales to the complexity of the issue at hand, you’re on the right track. (For example, your big-ticket items should have equally big — but still simple — compliance solutions.)

Secret to success: Risk registers

Your whole framework should be built around a risk register. This crucial document outlines all your compliance obligations along with other risks your business might face. It’s a clear and organised way to track what you need to manage.

By mapping your compliance obligations and risks to this register, you create a powerful tool that can guide your compliance efforts. For some small licensees, approaches based on risk registers could be enough, as long as there’s a genuine commitment to managing compliance risks. The more integrity you have in your willingness to comply, the simpler your framework can be.

Building your compliance framework

The first step is always to know (and understand) all the rules. This might sound obvious, but it’s often overlooked in the rush to set up fancy frameworks. You should focus on building this understanding on two fronts:

• What are the general rules?
• What are the specific rules that apply to your products and services?

Once you know what you need to do, the next step is figuring out how to show you’re doing it. This means setting up clear and simple processes to keep track of everything and prove you’re keeping up with key obligations. These processes should be easy to understand and follow, ensuring they can be used consistently throughout your business. Think of it as showing your team members what to do, not just telling them.

At every step, ask yourself: “How can I prove that we’re compliant?” If ASIC comes knocking, it will expect to see evidence. We’ve seen many licensees whose policies are a work of art but ultimately not efficient — and all because they can’t back them up with evidence of compliance.

Quick tip: How to keep it simple

A simpler, more streamlined approach can be more effective and save you money, too. In practice, this might mean focusing on the main compliance tasks that directly affect how you do business.

Instead of getting lost in the details of complex compliance requirements, start with the big-ticket compliance risks that you need to manage. Often, these are things like client money, retail/wholesale classification and market misconduct. If you feel overwhelmed, use your risk ratings to break things down into manageable pieces.

This way, compliance becomes more manageable and meaningful. It ensures that your efforts to follow the rules are closely linked to your business goals, making them more useful and effective.

Conclusion

Remember, compliance doesn’t have to be a huge headache. By keeping things simple and focusing on what’s important, you can set up a compliance plan that works well and is easy to manage.

At MIntegrity, we believe that starting with simplicity is the way to great results. By understanding your legal obligations and having a clear plan to meet them, you can build a compliance system that supports your business goals and meets regulatory requirements — without all the complexity.

Want to learn more? Need help making your compliance goals a reality? Contact us today.