Governor Software has executed a new update to its institutional compliance oversight solution through a licensed link to the FCA Handbook, allowing clients to automatically integrate and update their internal client policies and controls with FCA guidance. The move, believed to be the first of its kind, provides compliance professionals with a new visualisation tool to help them stay afloat in the midst of regulatory data overload.
“Keeping abreast of the FCA Handbook is no mean feat for financial institutions, with requirements differing between organisations and updates frequent. While other companies publish this handbook within their software we believe we are the first to take the structure and enable clients to link their policies directly to it,” said CEO Richard Pike. “This not only saves considerable man-hours, automatically alerting appropriate team members when their policies need updating or reviewing, but also provides comprehensive oversight and compliance through auditable mapping.”
The FCA integration is the latest step forward from Governor, a Dublin-based firm partially owned by the Irish Government, which launched back in 2015 with the goal of turning oversight on its head to create a top-down solution based on dynamic visual status management.
With the Financial Conduct Authority (FCA) expected to extend its Senior Managers and Certification Regimes (SMCR) and Conduct Regime (CR) to the vast majority of regulated financial firms by 2019, the question of compliance oversight is becoming an increasingly pressing priority for senior management – and an area that is currently both overlooked and underserved.
“Board members of financial institutions are under an increasing amount of scrutiny, and with well over 200 offences in the UK for which directors can be held personally liable, the cost of non-compliance can be severe,” explained Pike. “Yet the sheer volume of information to be processed makes the oversight of these requirements a complex and time-consuming business.”
The challenge is not one of regulatory compliance – banks and financial institutions will already have a wide range of robust and rigorous regulatory compliance procedures. The question is how to monitor, filter, track, and translate these systems to ensure effective and comprehensive oversight.
“To achieve excellence in governance you have to be able to understand your obligations to all stakeholders, measure your status against those obligations and prove that status to a third party,” noted Pike. “Just ringing up the head of AML every few months and asking if everything is OK just doesn’t cut it anymore. Our system takes the information from your core compliance and risk systems, and presents it at the higher levels in an auditable format.”
This is done through a unique process of visual normalization, based on the individual risk appetite of the client. With data stored in multiple forms across multiple categories, a bottom-up approach struggles to compare apples with pears (or capital calculations with open audit test problems). By contrast, the Governor Software Solution simply captures whether a client is “in” or “out” of appetite for each category of risk, using a traffic light system to deliver a set of binary results that removes the need to compare across metrics.
Displayed in the form of a dynamic graph rather than a static list, it operates like a kind of living mind-map, reflecting the performance of compliance functions in real-time to provide an overall picture of oversight across the organization.
The recent FCA integration takes this refreshingly logical approach to the next level, allowing financial institutions to tailor their compliance to the demands of the financial watchdog. “When a regulator walks through your door they think and assess financial institutions in terms of the FCA Handbook,” noted Pike.
“This update basically allows our clients to present their data in the way the regulator thinks.”