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With another IAF deadline fast approaching, firms are looking for ways to prepare themselves for the next cycle in compliance success, if they haven’t already. In Star's recent webinar with Áine Hickey, Vice President at the Compliance Institute of Ireland, and Kian Caulwell, Partner & Head of Financial Services Consulting at Mazars Ireland, we explore the current mindset among firms and the striking realities of increased accountability in financial services.
After meeting the previous December 2023 deadline, it seemed most firms could take some respite but in just a few months time, another deadline will come knocking. According to the Compliance Institute Survey Report, 86% of respondents are confident their firms will achieve implementation of the fitness and probity enhancements by the current deadlines while only 63% of respondents have established a formal IAF implementation project.
While it might seem like a healthy number of firms are prepared, we’ve seen challenges in building a framework, allocating roles and responsibilities, and other leading critical assessments, all of which take time for firms to navigate and resolve. Even though we’ve learned a lot throughout 2023, this year holds new complexities that will lead firms to strive for compliance or find themselves with increased administrative burdens.
In situations like this, it becomes clear that having guidance on certain aspects, access to industry discussions and shoulders to lean on are quite invaluable. So with the challenges of IAF, here are some key takeaways from our “IAF Made Simple: Your Roadmap to Compliance Success” webinar:
1. CREATING SUSTAINABLE STRUCTURES
Coming into 2024, we’ve had a first taste of IAF and are no stranger to what this year may look like and what actions we’ll need to take. What may often get overlooked as we keep our heads down and focus on meeting deadlines is the sustainability of what we’re building. IAF structuring isn’t a one-and-done situation. It’s an ebb and flow that has to have some kind of longevity.
The mindset has to evolve to building a sustainable program that is supported through training, various compliance programs and is continuously kept up to date. It has to be embedded into an organization's culture. To live and breathe it is not only good for the sake of the company’s compliance health, but it also makes it easier to tackle the next regulation.
IAF is not a stagnant piece of regulation so it can’t be looked at only to check boxes. With 80.1% of our webinar respondents actively preparing for the upcoming July 1st deadline, this is an important measure to discuss amongst your team to make sure the work being done now is effective and impactful for the work that’ll have to be done later.
2. AUTOMATING COMPLIANCE SYSTEMS
Having some form of automation in your compliance process will make things easier and provide a level of seamlessness that allows your team to focus on other areas of importance. This is a common theme and rings as a source of truth.
A centralized database will allow for managers, the compliance team, human resources and any other necessary departments to work together and have a singular source of truth. Many will know the pain of digging through emails to find specific correspondence or diving into files to confirm someone’s role, only to find that you don’t have access to that information and have to reach out to another department.
It can be difficult to move all your data and framework to an automated solution, but now can be an opportune time to make that switch. While switching to an automated employee compliance solution may sound intimidating, it will eliminate unnecessary manual work and system errors when transferring one batch of information to another program. A compliance solution will generate triggers for relevant individuals and you can build in the specific nuances of your framework so they are translated through the system.
Ditching spreadsheets is the goal but understandably, that can take time. With 3.1% of our respondents being fully automated, 47.7% managing on a hybrid level and 49.2% managing on a fully manual level, it clearly shows that the road to automation may not be clear cut but it should remain the goal.
3. SETTING UP FRAMEWORK AROUND REASONABLE STEPS
Once we reach the July deadline, documents surrounding reasonable steps must exist and be kept up to date on an ongoing basis. Record keeping and record retention are often a central source of information that can be pushed to the wayside so firms can focus on other portions of regulation but moving forward, we need to reset the standard.
Firm’s need to have recorded answers to questions such as ‘how long does the company keep a person’s email?’ and ‘should people be allowed access to certain information even after exiting?’. All of which needs to be sorted out internally and recorded so it can be referenced throughout your organization.
Firms must also keep in mind that as the regulations move forward and expand, compliance teams must understand what the plan is for compliance testing, internal audits and other forms of checking and testing to ensure that the framework is still healthy. It can be a lot to focus on before July but hopefully, teams have had this in mind as they’ve been building their IAF framework.
The upcoming months can be stressful on compliance teams as there’s a lot to navigate and nail down ahead of the upcoming deadlines. It’s important to focus on longevity, seek out industry discussions and look at how to change your existing framework. Now is the time to make impactful decisions that are positive for years ahead.
While the upcoming deadlines are fast approaching and getting closer every day, we can remind ourselves that with 89% of respondents in the Compliance Institute Survey Report stating that they believe their firm’s IAF readiness has improved when compared to this time last year, we can move forward with confidence and tackle the changes ahead.
