ACOI 2020 Annual Conference: The Compliance Journey - From Advisor to Partner & Leader

22nd October 2020

Opening Address

Maidin Mhaith a Thoscairí, Is mór an pléisiúr agus onóir dom an comhdháil seo a oscailt go hoifigiúil.

Good morning delegates. It is indeed a pleasure and an honour to open the 2020 ACOI Annual Conference.

I am particularly pleased to be speaking to you today as president, it’s in fact the first time since I took up the presidency in January that I've had the opportunity to speak directly to our members, normally I would have had a number of occasions to do so - but it is 2020 - so this is a very special moment for me.

This has been a very strange and challenging time for everyone, and extra burdens have been placed on us all, so it is especially gratifying to have so many tune in here today.

I know that we have been attending many webinars and zooming since the day of the Taoiseach’s announcement of lockdown on 12th of March and today of necessity is a virtual conference - the 1st virtual conference held by ACOI, so a momentous event in its own right. I do hope that you enjoy today’s conference and that you get plenty to take back to your day job.

So, to the theme of today's conference ‘Compliance from advisor to partner to leader.’ We chose this theme to reflect on the development of the profession and crucially to chart the next stage in the progression in our profession.

Like everyone who has been involved in compliance since the beginning of the profession I have seen huge change. Compliance began its life as a discipline about 20 years ago. In that time the profession has established itself, progressed through the Celtic Tiger, the global financial crisis, recovery, crises of culture with the various scandals, and now a global pandemic.

Reflecting on this I see the role of the compliance professional as having gone through what I described as the Five Ages of Compliance to borrow from William Shakespeare.

  1. The Pioneer Age - The first age or stage I would call the ‘pioneer’ age or stage – covering roughly the turn of the Millennium. During this time when compliance officers were literally pioneers, compliance in itself was a new discipline, consisting of a couple of Codes of Conduct, some data protection regulation of computerized records, and money laundering checklists and KYC procedures. The newly invented compliance role (it was not a function as such) normally comprised of 1 individual who had probably not been in the room when the role was allocated. It was often run out of internal audit or legal. Like all pioneers, those who took on the role at this time were facing unique and unknowable challenges. There was no street cred coming with the role, at that time, there was in fact minimal respect and in many scenarios, compliance professionals were met with bare tolerance and many interactions were marked with resentment and resistance and it's possibly not surprising that it was around this time the unfair and in my view damaging nickname ‘business prevention officer’ was coined. Many Compliance functions were under resourced and had either no or underdeveloped infrastructure.
  2. The Specialist Age - The second Age I would characterise as the Specialist age: when Compliance was gaining in profile if even still just being tolerated, the rulebooks were growing - we had the ‘New Data Protection Law’ in 2003, the forerunner of the Consumer Protection Codes, and the Central Bank got real enforcement powers, with the introduction of the administrative sanctions regime which brought the appearance of a change in the zeitgeist because there were actual penalties for non-compliance. This in theory should massively strengthened the position of the compliance professional within organisations, however arguably this is not what happened - at least not yet - because this was the period fondly remembered as the Celtic Tiger in Ireland. At around this time. Compliance was spun off from Legal or Internal Audit and became a standalone function. But what we now call ‘the first line’ or ‘the business’ had not sufficiently taken ownership of compliance risks, they still relied too heavily on the compliance function to actually manage compliance risks.
  3. Expert - the third age is the age of the expert compliance professional. This arrived as case law following enforcement cases in both the Central Bank, the Data Protection Commissioner and Financial Services Ombudsman as it was then. This meant that along with the growing regulation, there was a very substantial body of knowledge to be assimilated by anyone operating within the profession in order to be effective. Compliance Professionals had to develop a sense of what the regulators would regard as acceptable. The end of this period coincided with the global financial crisis which resulted in a paradigm shift in the management of risk, and firms’ approach to compliance. The three lines of defence were officially born and there was a need for the compliance professional to shift too, what some commentators call Compliance 2.0. The business had to take responsibility for ownership of compliance risk and to make risk decisions. The Compliance Professional had to firmly plant themselves in what is now known as ‘the Second Line’. This has been one of the most difficult adjustments for both the first line business functions to take on the responsibility for risk management and for compliance teams to let go and allow the first line to properly fulfil this recalibration and separation of responsibilities. It also brought with it the discipline of ‘Conduct Risk’ – a complementary field to address the embedded failings which lead to customer detriment. It was these repeated conduct failures that has rendered rehabilitating reputations of firms very slow.
  4. Partner - The fourth age the age of the Compliance Partner – where I believe we are now – is a business partner and advisor albeit in an independent second line capacity. Our knowledge of the businesses in which we operate has deepened as our expertise has developed beyond the rulebooks. Firms have – for the most part – bought into the importance of managing compliance risk. Compliance is key to managing reputation risk. Some of us will be a ‘trusted partner’ what I have called the conscience of the organisation. The firms with a healthy risk management culture will seek out the views and advice of their Compliance team – and heed it, although unfortunately even today this is not universal. And now we are moving to;
  5. Leader - the age of the Compliance Leader. This fifth age is the most challenging of all. Leadership in Compliance is now a fundamental and essential role because it is leadership that confers the power to influence and implement. It is no longer enough to be able to interpret rulebooks and regulations. With culture and reputation of firms under the spotlight – and with no sign of that changing any time soon, mere technical competence, even mastery is not sufficient and a lot more is expected of the compliance practitioner or leader.

Today’s Compliance leaders must be part lawyer, part project manager, part regulator, part teacher, part psychologist, corporate strategist, HR manager, PR professional, Equality Advocate, Salesperson, Trouble shooter.

At each stage of this evolution, compliance professionals have met the changing demands and ACOI has been the education partner and skills provider of choice.

Today's contributors will explore what it means to be a compliance leader in the businesses of the 2020s. Kingsley Aikens Chief Executive Officer of the Networking Institute will talk about the importance of networking to compliance officers and give you some tools to network effectively even for natural introverts. Eimear Barry will talk about protecting yourself and your teams psychologically - a very important skill for a compliance leader when you can work in a field that often feels unloved. Mark Sweeney will talk about being a strategic leader in practice. After our break we have a distinguished and experienced panel who will take the themes explored in the early morning session and their experience and give us their insights in a panel discussion on what it is to be a compliance leader in practice. There will be a short window for questions to the panel. Sylvia Cronin an experienced INED who was Director of Insurance Supervision at the Central Bank of Ireland until 2019 will give us some insights into what the independent non-executive directors who don't work on a day-to-day basis in the business of a regulated firm they need from their compliance leader and finally an important and growing area for both compliance and leadership - how to address diversity and inclusion challenges Dr Ebun Joseph, Career Development Consultant at Royal College of Surgeons in Ireland will discuss the benefits of a diverse team.

At the end of the morning we will close our conference with some of my own thoughts on the challenges of compliance leadership and during that I have a very special announcement to make - a new initiative we at ACOI are very excited to be offering to members.

 

Closing Address

Thank you

I hope you enjoyed this morning, and I am sure you agree with me that our contributors provided valuable food for thought.

Given the pandemic has robbed us of our usual information sharing opportunities, before closing, I would like to take a moment to update you on the progress ACOI has made during the year.

CPD Events
• It has been a busy year for the ACOI team despite the lockdown. At the outset of the pandemic, the team ensured that ACOI moved seamlessly from in-person to online delivery of our events, thereby maintaining our services to our members;

• SO far in 2020, ACOI has delivered 40 events with a further 10 events scheduled over the next 2 months.

• That will bring a total of over 60 CPD hours delivered by the end of this year ensuring all members meet their CPD requirements, across a diverse range of compliance subjects and soft skills with just over 3,500 attending.

• We launched the ACOI Leadership Programme – which has been very successful and inspired todays theme. The programme highlights the important skills that a leader needs to successfully juggle the demands of team, task and the individual. 12 students undertook and completed the Certificate in Leadership Skills programme, this course is run in small groups because of the need for one-to one teaching, and we received really positive feedback and we will be running this again in 2021.

Growing the Executive
At the beginning of the year in ACOI, we had 4 in our Executive team – we now have a team of 6 with two just joining in the past 6 months; We have welcomed Ciara Lambe as Head of Operations Ciara joined us in April, from Dublin Business School, where she was responsible for developing and managing a team of over 120 faculty members from the Arts & ICT departments. Mervyn O’Shaughnessy is our new Business Development Manager and he joined us on Monday. Mervyn was previously at Claims Funding Europe and was CEO of the Sales Institute of Ireland.

So, welcome to them and I look forward to working with them.

 

Membership Workshops
In the Spring we held a series of member workshops at the start of the year (pre – lockdown). The aim of the workshops was to discover how members are currently engaging with ACOI and to determine what is working, what could work better and what is not working.

All of the feedback was collated under the themes of; Be visible, Communicate, Education, Engage, Enhance access, Facilitate connection, Global, Modernise, Partnerships, Promote the brand, and Social and Connected

The actions arising from them range from addressing more fully soft skills that compliance professionals need (see our new Leadership Skills course), to looking at how we can enhance networking in the post - COVID period, and also ensure that we are addressing the needs of younger members.

All of the output of the workshops was reviewed and discussed by ACOI Council as well as the Workshop attendees. We shared the full Implementation Plan with participants in June with updates on ACOI’s progress on their feedback and comments and we will continue to report back to them on progress.

Media Coverage
As outlined in our three-year strategic plan one of our key strategic objectives is to raise the profile of ACOI and become the ‘voice of compliance’.

We have received widespread coverage in national and regional media and are now seen by certain media outlets as the ‘Go To’ body for commentary on matters relating to compliance.
• ACOI have taken the lead in representing and championing the opinions of members by conducting surveys and issuing members views and insights in the media. So far, we have shared our members thoughts into how they and their organisations are adapting to the changes resulting from COVID-19 and their opinions on what should have been included in the 2021 Budget.

We will continue to raise the profile of ACOI for the benefit of our members and for the stakeholders we serve into 2021.

Award Winning
We always knew that the ACOI qualifications are exceptional in their own right. But now we have proof! At the European Compliance and Ethics Conference on 6th October 2020 attended by over 5000 delegates the ACOI/IOB Professional Diploma in Leading Cultural Change and Ethical Behaviour in Financial Services was nominated for the Inaugural ECEC Award along with 7 other initiatives from Switzerland, Germany, France and UK.

The ECEC Award is intended to honour exceptional Compliance efforts which have the power to inspire the Compliance community. The Diploma came second of the 8 projects, narrowly losing out to an initiative by the French national postal service La Poste. The jury of 5 was made up of leading academics and practitioners from across Europe. The jury commented on the programme’s thought leadership, innovative approach, academic rigour, use of practitioners and case study and support from the sector as points worthy of mention.

What next for ACOI?
The arrival of new technologies has revolutionised every part of our lives including how we deliver and access financial services. In a PWC Fintech Survey in UK in late 2019, 56% of global financial services executives surveyed believe Artificial Intelligence will transform the way they deliver services in the next 2 years. When you look ahead to 5 years, those executives believe that it will be 85%.

Machine learning take up has increased over the last number of years and last year more than 60% of firms surveyed by the Bank of England said they were using machine learning especially in banking and insurance. So clear trend that adoption of new technologies is growing at apace.

Given this uptake by customers, attention from regulators and interest from investors and shareholders, now we in ACOI - in compliance education - are also responding to this. On behalf of the Council and Executive of ACOI I am delighted to announce today a new educational offering from ACOI. We have collaborated with Professional Accountancy Training on a course as a response to the rise of the Fintech industry, the Professional Certificate & Diploma in Fintech: Risk and Compliance.

These Technological innovations are designed to bring efficiency, consistency and an answer to some of the risks faced by the industry like human error, but they bring their own risks such as explainability, interpretability, data protection, accountability. These new technologies are themselves necessitating new regulations and in some firms the compliance remit is increasing to cover cyber risks. We have seen new technology to help manage regulatory risk or regtech.

This course will address the compliance framework and specific risk factors in a Fintech context.

The course is aimed at individuals currently employed in compliance and regulatory roles, those in established fintechs, but also those in the traditional financial services which are trying to compete in the areas and who are therefore experiencing the same risks as Fintech’s, plus anyone seeking to develop a career in financial services.

It will provide participants with the knowledge and skills required to assess and manage the associated evolving compliance challenges.

I have personally been very involved in designing and developing the syllabus, and I believe it will be a really interesting course for everyone who signs up. We hope to have our first intake in early 2021 so please look out for further information on this in the coming weeks.

Before my concluding remarks, I would like to thank everyone who assisted ACOI this year – there are too many to mention, but we are sincerely grateful for their contribution. I would like on behalf of the Council of ACOI and the members here today to thank all our speakers and also the ACOI Executive, who under the leadership of Michael Kavanagh, Our CEO have made today’s conference happen.

• We heard from Kingsley who gave us a really interesting perspectives – and if you weren’t convinced about the importance of networking – you will after listening to Kingsley – it’s about giving, not getting, he exploded the myth of the born networker, and the importance of tiny differences. He gave us a positive perspective on how to profitably use the lockdown. He urged us to prune our networks and spoke optimistically about the future post pandemic.

• Eimear Barry,

o Talked to us about the importance of emotional self-management and to recognise self-defeating behaviours

o Gave us strategies for managing our own triggers through the emotional dashboard

o The benefits of a growth mindset – and the word ‘yet’

o As someone who ‘always finishes the book’ – I have had my own core beliefs challenged

 

• Mark Sweeney – spoke about how we think and how that frames our attitudes. Mark challenged us to raise our horizon above measures – and we in compliance do love our KRI’s – and to look beyond the numbers. He gave us some practical steps we can take in developing our leadership identity.

• Both Eimer and Mark talked about conflict and how to harness conflict and use it.

• The Panel gave us the benefit of their considerable experience;

o Importance of communicating to all audiences,

o Importance of understanding the business you are operating in and

o The need to keep listening as a valuable skill.

 

• Sylvia Cronin - gave us the perspective of the INED and talked about the required behaviours of the Board and the importance of culture. Sylvia broached the difficult subject of Climate Change as a responsibility for Compliance.

 

• Dr Ebun Joseph talked about the importance of understand the narrative of the past. She challenged our attitudes to difference, the benefits of difference in the workplace, that equality is not enough, but equity and justice are the goals.

To conclude with my own thoughts on compliance as leaders in their business - This is an exhilarating time to be a compliance leader because leadership itself is changing. We are living in an age of catastrophic leadership failure in the wider world. The election of populists, Brexit, the climate emergency, Black Lives Matter and the pandemic have been accelerators in challenging how we view leadership and what are the essential qualities required of a leader. The crises and conduct failures in financial services of the last 12-15 years have brought re-appraisal of leadership very close to home.

Adding into that technology and the rate at which it accelerates, and powers change means we are at a leadership inflection point. The traditional concept of leader as being all knowing, analytical, rational, certain, confident are rightly under question and we need to think differently about leadership.

Dr Pippa Malmgrem and Chris Lewis in their recently published book – The Infinite Leader - talk about the ‘balanced leader’ the leader who uses both sides of their brain – the analytical and the imaginative sides, thinking for the short term and the long term, the quantitative and qualitative. They talk about leadership as being a piano keyboard - at one end is what they describe as the traditional qualities – like priority for bottom line and these alternative emerging qualities like empathy, resilience, and a community mindset and that good leaders can move across the keyboard and deploy different and often opposite styles and attributes.

The Central Bank’s own recently published thematic assessment of diversity and inclusion in insurance firms supports the idea that diversity in leadership roles has a positive effect on decision making and culture and guards against a lazy culture, herd mentality and excessive risk taking. With an increasing greater focus on individual accountability there is a greater need to be able to demonstrate that you behaved in the right way and discharged your responsibilities.

So, the Compliance Leader in this era of changing leadership still need a range of conventional qualities and some of these qualities which are novel; • courage to promote the right culture and behaviours, and call out exposures and wrongdoing,

• patience – compliance and leadership can be something of a long game, to establish credibility and gain trust of your internal and external stakeholders, which brings me to a third quality,

• trustworthiness – there has to be something about you that makes colleagues and senior management seek out your opinion and then to heed it.

• A quality that is now valued in a leader is empathy – compliance leaders have to authentically care about customers especially but also for your colleagues and your organisation. Because Leadership is not about other people – it is about you – and this applies at every level of the compliance profession – not just for senior managers and heads of compliance. Leadership in our profession is not about titles or even seniority.

• Compliance, contrary to the stereotype is for the passionate and not for the indifferent – you need to believe in the message you are selling (and yes you are selling!) - you just need to choose when to unleash your passions, but you must be a true believer!

• Curiosity is essential in a compliance leader – it’s not enough as we have seen today to understand the rules, you must be curious about the business you serve, the customers it serves and the people who serve alongside you. I have had direct experience of that myself, when I thought 2 years ago that I knew everything about mortgage regulation, - and then I worked on a project that showed despite my over 15 years’ experience in the field, I actually didn’t know anything like as much as I thought and I embarked on a very intensive learning curve. It came as a shock to me - so always be keen to learn more. Leaders never stop learning. The final quality or skill I believe is essential is as a storyteller – to be able to influence and win hearts and minds you need to be able to paint a vivid picture for your audience to illustrate the point you are making, the course of action you are advocating or the vision you have for the culture of your organisation. We in Ireland have always valued our storytellers and have been good at it – that skill can be brought into our own workplace to power our influence.

I will finish with a quote which I believe brings these together and is pertinent in the context of compliance leaders it’s from General Colin Powell American politician, diplomat and four-star general and the 65th United States Secretary of State from 2001 to 2005, the first African-American Secretary of State.

Great leaders are almost always great simplifiers, who can cut through argument, debate, and doubt to offer a solution everybody can understand.”

On behalf of Council and the Executive of ACOI, Thank You for your attendance and attention today. Until we can gather together as an Association, we hope you and yours all stay safe.