On September 27, 2022, the SEC announced charges against 15 broker-dealers and one investment adviser […]
Compliance training has moved from instruction on regulatory requirements and how not to flout them to a more intense focus on fostering an ethics-friendly culture, compliance chiefs say. Recently released results of a survey of 763 professionals who deal with compliance or legal responsibilities show that 90% cite creating a culture of ethics and respect as the top training objective.
Complying with laws and regulations (89%) and preventing future misconduct (82%) came in second and third, according to the Navex Global 2014 Ethics and Compliance Training Benchmark report. The Navex survey spanned 39 industries, including banking and financial services. Survey co-author Ingrid Fredeen notes that strong oversight by the Securities and Exchange Commission and other regulators helped fund firms stand out.
“The key takeaway I have for CCOs is if you are in a position where you are looking at effectiveness, then budget for measurements of effectiveness,” Fredeen says. “Don’t just assume completion equals effectiveness, otherwise it won’t happen.”
Jim Volk, CCO for SEI Investment Manager Services says that the best training program will do little good unless the organization’s top executives lead by example.
“If people are following the rules but doing it kicking and screaming, then you are not really changing the culture,” he says. “If the culture is good, then the nuts and bolts will take care of themselves.”
Volk stresses that firms should invest in high-quality training that includes presentations with powerful graphics that sink in, rather than issuing lengthy documents for employees to pore over. SEI also uses video where employees and hired actors demonstrate good and bad compliance action. In one scenario, an employee’s personal views expressed on social media get improperly tied to SEI.
“The point is when you invest the time to make it more vibrant and to catch their attention, it makes it more memorable and lets them know if we in invest in [the presentations] that much it must be important,” Volk says.
To prepare his compliance staff, Todd Spillane, CCO of Invesco, encourages them to sharpen their presentation skills by participating in a weekly public speaking group in Invesco’s Houston headquarters. He has joined in on those meetings along with more junior staff.
The survey also found that 45% of respondents say their organizations plan to implement more training for middle managers.
Mitch Avnet, managing partner at Compliance Risk Concepts, notes that firms lacking “consistent and cohesive training and messaging to mid-level managers” place their organizations at great risk.
“Employees who don’t think they can take an issue to their direct manager ... are in turn likely to go externally with their issues,” Avnet writes in an e-mail response to questions. “An organization must create an awareness and culture encouraging employees to raise their hands — bring issues to their direct mangers with no fear of repercussions.”