As the U.S. economy continues to struggle, financial services firms across the country have engaged in cost-cutting measures to salvage as much of their bottom line as possible. According to the director of the SEC’s office of compliance inspections and examinations, Lori Richards, those cost-cutting measures just better not include compliance departments and programs.
“By fulfilling their obligations, regulated firms in the financial services industry can help to restore and bolster public confidence in the fairness and integrity of our markets and market participants,” Richards said, according to a recently published Reuters report by Karey Wutkowski and Julie Vorman.
The SEC recently sent a letter to registered financial services firms informing them that compliance programs cannot be among any cost-saving cut backs. The purpose for the SEC’s confrontation of this issue is restore investor confidence while reducing potential exposure to risk for investors, management, and employees.
A recently published article by Jim Nortz, Compliance Director at Bausch and Lomb, discusses using metrics to measure compliance performance. One of his key ideas is that compliance departments must be able to effectively measure and communicate the benefits they provide to organizations. According to Jim Nortz:
“If we are unable to demonstrate to our respective organizations that our efforts are materially reducing costs or compliance/ethics risks, then it’s just a matter of time before compliance offices are shut down or consolidated into more traditional corporate functions like the Law Department, Accounting Department or Human Resources.”
The recent initiative by the SEC to essentially mandate the continued existence and important of compliance departments should help to alleviate any fears of their consolidation within organizations; still, it appears to be as good a time as ever for compliance departments to assess their metrics and analyze performance. In so doing, compliance departments can communicate their value and remain an essential corporate department even after the economy begins to turn around.
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