The relationship between compliance and sales is critical for the success of any financial services business. Compliance teams that are seen as a key component in business growth are the most influential and respected, but this is not an easy position for a team whose main function is meant to be managing risk.

How can senior compliance professionals make compliance a vital part of revenue generation as well as managing risk?

The most common criticisms of compliance teams that we hear from the industry are that they are:

  •     Too dictatorial –the “Business Prevention Unit!”
  •     Too inefficient –taking too long to review potential new clients
  •     Too resource heavy and purely a cost centre
  •     Unnecessarily restrictive– too risk averse for the firm
  •     And compliance just don’t understand the real world

How can compliance teams ensure that firms are meeting legal requirements and are protected without being seen as holding the firm and sales teams back? Surely the role of compliance is to prevent the business from taking unnecessary risks and therefore it follows that compliance will always need to be a ‘business blocker’ to some extent?

But compliance can increase revenue as well as reduce risk

By working with other teams to help increase revenue,compliance teams become more valued and respected in a business. Colleagues don’t try to avoid asking for their input but actively seek their advice. Sales stop trying to work around their procedures and rules, and instead actively involve them in finding solutions for perceived ‘difficult’ cases.

The relationship between compliance and sales

Having an effective relationship between compliance and sales is vital. Compliance will always have to say no to certain requests but, by balancing this with activities that help sales, compliance professionals can make sure that they are not seen as blockers.

Compliance teams that work with sales to see how changes to the way they operate can help increase sales and reduce barriers, without increasing risk unreasonably, tend to be more successful in delivering a solid compliance function because they have the cooperation of their colleagues.

Effective compliance teams also help sales to understand the risk profile of the company, i.e. the balance and company priorities in compliance, rather than just policies. This way compliance helps sales deliver their targets but have more influence over the manner in which business growth occurs. If sales and compliance can have effective conversations, they can improve the fit of compliance frameworks and respond quickly to changes in the market and risk profile.

Passing on compliance costs

If you operate in a business where your clients need to be compliant, they are the ones who benefit most from your compliance procedures and so you can easily justify the need for them to absorb some of the costs.

In order to do this compliance teams need to educate sales on the benefits to clients of absorbing these costs. For example, clients who employ advisors and third parties to develop their initial frameworks and procedures, maintain understanding and control over this vital component of their business.

Compliance teams that achieve this effectively reduce their own workload but are still able to ensure that they have effective compliance structures and strategies in place. This enables them to reduce costs but also focus more time on strategy and maintaining effective relationships within the business.

Justifying compliance budgets

If compliance is seen as nothing more than a cost centre, then this will impact on the resource available and its influence compared to other revenue generating activities. But compliance can justify its budget through revenue generation as well as reducing charge backs and fraud.

This doesn’t mean taking on too much risk – look at possible changes that won’t increase risk or that will give a more effective fit to the risk profile required by your business. Highlight to the business how the changes you are making will impact on profitability, for example through:

  • Speeding up realisation of revenue
  • Reducing the cost of acquisition
  • Reducing dropouts

Maintaining the correct balance of reducing risk against increasing sales, and making sure client-facing compliance procedures are as efficient as possible, can help ensure that compliance is seen as a vital part of revenue generation rather than just a cost centre.

This tends to increase the status and influence of compliance within the business, moving compliance from a cost centre to an important component of sales and profit generation.

Effective compliance

Compliance isn’t just about protecting a firm, it is vital for success and profitability. Effective compliance departments should see themselves as setting the framework for secure growth. Through effective collaboration and efficient procedures, compliance teams can be seen as helping to increase sales and a crucial component to business growth and evolution.

To learn more about how compliance can drive business growth and increase your revenue, register now for our exclusive Compliance For The Real World event here.

Sue Hinchliffe                                                                                                           

Strategic Development Director

Neopay Ltd