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Getting compliant in banking

Posted by: Laurence Simons 12/08/14

Banking regulations have been getting stiffer in recent years - and that means those involved in compliance jobs have a big role to play. The last few years have been a tempestuous period for banking in the UK and many other places. An era of light touch regulation was widely blamed for creating the credit crunch and the sector has subsequently been hit with a number of other scandals, such as the fixing of Libor and the mis-selling of payment protection insurance.

It would be highly inaccurate to say this means the sector was not regulated at all - legislation in the decade before 2007 include a new data protection act and fresh anti-money laundering (AML) regulations, the latter coming in response to the need to tackle various forms of increasingly prominent financial crime, some of which was being used to fund activities ranging from terrorism to human trafficking.

In the AML case, several banks were fined for breaches of the rules, such as passing as current proof of address old documents that had been altered by hand. 

Tightening rules

For all that, it became clear after the maelstrom of 2007-08 that tighter regulation was needed and while the crisis brought all manner of problems for the UK economy, it has also created opportunities for those seeking banking compliance jobs. The need for financial institutions to have competent and dedicated staff has never been more evident, either from a legal or reputational point of view. 

The latest regulation

Since the coalition government came to power, there have been some significant changes in regulation, primarily the abolition of the Financial Services Authority by the Financial Conduct Authority, with many powers for regulation being transferred to the Bank of England. All that has been carried out in a bid to streamline regulation and ensure the issue is not a ball that the Bank, regulatory body and Treasury manage to drop between them.

More recently, new rules came in to regulate mortgages. These are designed to restrict the number of home loans that can be issued at more than 4.5 times the income of the applicants to just 15 per cent. 

Dealing with the issues

The financial sector has remained some way short of meeting the standards it has been required to meet, as the latest Financial Ombudsman data shows. In 2013-14 it handled over 2.35 million initial enquiries and over 512,000 formal disputes arose. While nearly 400,000 were concerned with PPI, other common ones included fees for packaged accounts. Notably, four large institutions accounted for 63 per cent of cases.

One major effort made by the banking sector to improve matters has been the Banking Standards Review Council, which aims to help oversee regulatory standards in UK banks Those working in banking compliance jobs will have a very important role in helping make this body a success. Those working in banking compliance jobs will have a very important role in helping make this body a success. 

While the banking sector may have a bad reputation to live down, those working in compliance jobs can help go a long way to fixing its problems and helping to create a better system for the future that meets the needs of its customers and offers more economic stability.