Scott Tominaga – Why Compliance Is In Place In Finance

Every single person and company which works within the financial landscape must adhere to highly tight compliance and regulations. This is something which has in fact evolved over time and now it is more important than it has ever been before. There are many experts within finance who have been calling for tighter compliance for many years, financial experts such as Scott Tominaga. Whilst there are also many who still believe that more should be done, it is fair to say that we are living in a world where compliance is tighter than ever.

Compliance is there to ensure that products are sold properly, and it offers a range of benefits to both the consumer and the financial service which must meet its criteria.

Creating Trust

For the most part, banks and reputable financial companies are trusted amongst the consumer. When it comes to smaller operations however, especially those within asset management and trading, trust can be hard to come by. Thanks to compliance however customers are given much more incentive to put their faith in a company than ever before. Customers know the level of regulation that exists and this is why they can be more trusting than they once could.

Saving Money and Embarrassment

Compliance is updated all of the time and in the main it is a reactive measure that will prevent things taking place again. A perfect example of this is the payment protection debacle. For many years banks and private lenders were charging individuals for payment protection, without actually asking whether or not they wished to have it. The result was an embarrassing repayment mission on the part of the banks, which cost them money and left them with red faces. When compliance is changed in this way it means that these things are no longer able to take place.

Accounting For Rogues

Every financial institution will invest your money and look to make it profitable, this has been the same for many years. Sadly however there were some years where this just wasn’t taken care of properly and we ended up with rogue traders, playing roulette with the bank, and its customer’s money. Thanks to compliance this is no longer able to happen, and that is good for both the bank and the customer.

Transparency With Products

Much of the reason for the 2008 financial crisis was the fact that bad mortgages were able to be combined with other poor quality mortgages and sold as one. Eventually this house of cards fell down, and we all saw just how catastrophic that turned out to be. Thankfully however we now have compliance in place to prevent this from happening again. Compliance in this regard ensures that there is full transparency behind the products that a bank or financial services company is allowed to sell. Again this is something which protects both the seller and the buyer of that product.

This is exactly why compliance is so important in the world of financial services.

Be first to comment