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Do you opt for an internal or external compliance officer? Or perhaps both?
The financial sector and beyond
Compliance and integrity as concepts are mainly associated with the financial sector. This is logical, because banks and insurers are obliged to perform the compliance function. But beyond that, it is also becoming increasingly important to be compliant and act with integrity. Due to public opinion and increasing regulatory pressure. Then comes the question of how to organize the compliance tasks.
Internal or external?
Are you going to fill in the compliance function internally or outsource it fully or partially (co-sourcing)? Cost savings are often the main driver behind your choice. However, is this the only factor involved? We are convinced that this is not the case. What questions should your organization ask itself to determine whether the compliance function should be performed internally or (partly) externally?
Cost savings should not be the most important factor in choosing between an internal or external compliance officer.
Is it feasible to fill the position with quality talents? The rules in the field of compliance laws and regulations become more and more complex, likewise the supervision becomes increasingly intensive. It’s a diverse discipline. Realistically, can we expect that an internal employee will have all necessary knowledge and will be able to monitor, analyze and apply all changes in this field? Or would it be better to outsource and focus on your core business?
Would you like to offer your compliance department extra support with up-to-date knowledge and advice from our compliance experts? Or would you choose to fully outsource the compliance tasks to guarantee the best quality?
For a financial institution it is mandatory to set up the compliance function independently and effectively. If an internal compliance officer also partly has a different position, independence can be jeopardized. This is especially the case with smaller organizations that do not need a full-time compliance officer. An external compliance officer is by definition independent.
The costs are also important, of course. Organizations look critically at their activities. The question is: what is more reasonable to be done in-house and what could better be outsourced? In other words: can we justify the costs for an internal compliance officer?
Can you guarantee the continuity of the compliance function with an internal compliance officer? What do you do when one of your compliance officers is going to be absent for a longer period of time or decides to leave the company? What if you need extra capacity for a new project or upon a request from the supervisory authority? Hiring external support guarantees continuity in terms of knowledge and capacity. Whether it is co-sourced or outsourced.
The choice is yours
How can you fulfil the compliance function most effectively? Whatever choice you make, the final responsibility remains within your organization.
- What would be the best choice looking from a cost and quality perspective?
- Is it feasible to guarantee the independence of an internal compliance officer?
- Which tasks are so intertwined with your organization that they could not be outsourced?
- How do you maintain the required level of knowledge within your organization?
- Can you guarantee the continuity of the compliance function with your internal capacity?
- Who is the main point of contact for external compliance officers in case of outsourcing or co-sourcing?
Questions with no standard answers. Questions we are happy to help you with.
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