This article was originally featured on Compliance Angle and can be found here.

The Financial Conduct Authority (“FCA”) require all regulated firms to have a Compliance Monitoring Programme in place, which includes actions for the firm to check it complies and continues to comply with its policies and procedures.

But what about having a Compliance Plan?

Are Compliance Plans really that useful?

What’s the difference between a Compliance Plan and Compliance Monitoring Programme?

While the Compliance Monitoring Programme ensures ongoing assessment and evaluation of a firm’s compliance framework via procedures, monitoring, and audits, a Compliance Plan sets the groundwork for a firm. It provides guidelines on how the firm achieves and maintains compliance, and acts as a roadmap for a regulated business.

What’s usually included in a Compliance Plan?

A Compliance Plan is a document that outlines the firms approach in ensuring compliance with relevant regulations and internal policies. It is usually based on a one-year timeline; it can commence January each year, or at the beginning of each financial year. A Compliance Plan includes the following features:

  • The name of the regulated entity, the date of commencement, and the name of its owner (i.e. who is accountable for the plan);
  • Details of the compliance function: its size, reporting lines and any responsibilities of a compliance committee;
  • Clear examples of the firm’s focus areas. For example;
  • What are the greatest regulatory risk areas in the coming year the business needs attending to?
    • Will there be a change in the business model of the firm where it may have a regulatory impact?
    • What resources will the firm have (and need) to address initiatives in the coming year?
  • Measurable targets, including KPIs, to tackle the objectives in focus areas. For example:
    • Definition of the initiative or project i.e. the FCA may change SM&CR rules that may impact the senior management functions of the firm.
    • The reason for the initiative or project i.e. will non-compliance of the new rule change lead to FCA scrutiny, a fine, or potential staff resignations?
    • Who will take ownership of the initiative or project i.e. the Head of Compliance, Head of Human Resources or Business Leader?
    • Timeline of completion i.e. completion by Q2? Q3? Greater than a year?

What are the benefits of having a Compliance Plan?

  1. Attracts potential investment: Compliance Plans are more than an opportunity to minimise risk and avoid regulatory penalties. Having the right compliance strategy documented in a Compliance Plan can provide a significant business advantage – all this attracts long-term investment, through both word-of-mouth and documented proof of compliance processes.
  2. Saves costs: It helps to identify what’s working, what isn’t, and what resources (for example, more efficient technology) is required to be allocated to achieve the plans goals. Having the right compliance strategy can save a firm money across the board, where stricter regulatory enforcement and mounting social pressure have made a strong compliance culture more important than ever, with a direct monetary impact.
  3. Board and Senior Management Awareness: Compliance Plans are Board-level documents that allow senior level awareness and buy-in of how the compliance function will achieve its goals in any given year.
  4. Keeps colleagues updated on business and regulatory changes: It’s a living and breathing document which can be amended at any point during the year to help colleagues keep updated on the changing regulatory landscape or the firm’s business activities.
  5. Everyone provides input: It maintains input from the compliance team, as well as leadership of the firms other business functions. It ensures all colleagues are on the same page when tackling the most pressing issues in the forthcoming year.

A Compliance Plan is a structured framework for decision-making, and reduces the likelihood of disruptions caused by regulatory issues and promotes overall operational efficiency.

Most importantly, a Compliance Plan can show the FCA the firm takes compliance seriously!

Compliance Angle can assist firms with drafting and implementing a Compliance Plan. Email info@complianceangle.co.uk or call 07427792594 and ask us about how to create a Compliance Plan for your business.