The author of this article is Bahaa Abdul Hussein. As a Fintech expert, Bahaa Abdul Hussein always shares his experience on various platforms. As both online & offline banking operates in tandem, banks must re-think their compliance protocols to prevent huge penalties.
Last year, the U.S Securities and Exchange Commission (SEC) slapped a $200 million fine on the face of a multinational bank for failing in ensuring strict compliance around communication management. Consequently, the Financial Conduct Authority (FCA) put out a warning for banks & finance management companies that have a lax compliance structure.
With increasing regulatory pressure, banks and other wealth management firms need to incorporate the current generation standards for compliance, powered with the latest computing technologies. Compliance departments need to set up an effective risk-management strategy to avoid fines. Moderating new communication pathways to ensure compliance & mitigate risks is the need of the hour.
Ways to improve communication compliance systems
By following a few basic guidelines banks can strengthen how they handle compliance & minimize risks accordingly. Some of them are:
- Comparing Communications – Reviewing high-risk channels for an additional layer of safety is a useful approach. Checking whether communication across written docs, scripts, marketing brochures, automatic messages, recordings & the internet is consistent as per the bank’s policies and practices is essential.
- Protect Consumer Privacy – Whether it’s an email, physical document, or verbal form of communication, banks must follow a strict level of security and privacy. Avoiding the exposure of personal information to potential hackers could result in penalties.
- Training Frontline Employees – Reinforcing training for front-end staff regarding the bank’s systems, and processes for imparting or receiving client communication may be useful.
- Having a Contingency Plan – Having a well-planned risk management strategy at hand is highly essential for banks as unforeseen events may pose great risks e.g. natural calamities and disasters.
- Improving Cross-department Communication – With the advent of GDPR (General Data Protection Act) in 2018, the collaboration between different departments has shot up significantly. Aligning the heads of compliance, tech, marketing & customer service to ensure consistent messaging is key.
Some additional tips:
- Designating a Spokesperson – Defining roles for initiating specific lines of communication is integral in maintaining a sound compliance routine. This also helps in keeping synergy between the different communication gateways.
- Having Clear Disclosure Policies – It is in the bank’s interest to do away with vague provisions that blur the meaning of monetary incentives.
- Proper TSP Management – Telecommunication Service Priority (TSP) is an FCC mandate and banks must strictly monitor TSP communications to clients made on their behalf.
- Fostering a Compliance Culture – The top decision-makers in wealth management firms must inculcate a company culture that is conducive to compliance.
Banks should take full responsibility for their communication, including the ones conducted through TSPs. Imparting accurate & consistent communication with customers helps safeguard the bank against regulatory penalties in the form of million-dollar fines. Making the above-mentioned improvements will result in better efficiency and lower costs, enhance the visibility of the bank’s compliance profile & ultimately maximize business performance.
The article has been published by the editorial board of the Fintek Diary and is authored by Bahaa Abdul Hussein. Happy Reading. For more information please visit www.fintekdiary.com
