Essential Strategies for Financial Services Compliance, 2nd Edition

Chapter 1The UK Regulatory Environment

Although many of the concepts and practices described in this text are products of a growing Compliance discipline that does not proceed directly from any regulatory rule or guidance, regulation is undoubtedly the founding spark and ultimate justification of all Compliance activity in the financial services industry. It is almost certainly true that there would be no Compliance function, Compliance Officers or Compliance anything else if there had not first been a regulatory system in which to put them. It therefore follows that, to get to grips with Compliance, one should have a sound understanding of the regulatory environment that gave rise to it.

This is not to say that Compliance does not justify itself on its own terms, but few financial services businesses volunteer for it; few want to be ‘fettered’ by a framework of ‘restrictions’. Certain firms that are on the perimeter of needing to be regulated have chosen to employ Compliance Officers. Furthermore, a number of firms in industries such as healthcare, pharmaceuticals, beverages and even auction houses have chosen to employ Compliance Officers. However, financial services regulations are there because the industry has purposes to serve beyond the enrichment of those it employs directly, but has a patchy record when it comes to making itself fit for the pursuit of any other ends. Compliance is there because it is too risky and too complicated to try to navigate the regulatory terrain ...