Within the world of finance there is so much by way of red tape or compliance which must be adhered to when any action is taken. This includes actions that the banks takes and it also includes any actions between the customer and a bank or financial institution. his can be a pain for all involved and essentially compliance means more checks, more due diligence and a great deal more by way of questions and answers. This is however a critical aspect of the financial world and as much as it may be a pain, it is necessary in this sector.
Financial expert Scott Tominaga has been asking recently about the importance of compliance and in particular, why this has to exist within the financial landscape. Here is a summary of why experts like Scott are so keen for compliance to remain.
At the heart of why compliance exists is the fact that we have been forced to learn important lessons from the past. Each time a trader has overstepped the mark and began to gamble a bank’s money, each time a bank or lender has buried charges into a contract and each time a mortgage has been wrongly repackaged, problems have occurred. Each time that these things have happened, we have been forced to then add layers of compliance to all that we do, in order to ensure that these issues don’t happen again.
Protection of the Customer
The main reason for the existence of compliance is that it greatly helps to protect the customer’s interests, as well as their money. When we sell the customer a product we have to ensure that everything is done above board and that they have been made completely aware of everything that they are signing up for. Banks and lenders should always have the customer’s interests at heart and thanks to compliance this is exactly what we are able to deliver for them.
Protecting the Business
jJust over 15 years ago a huge number of banks and lenders were forced to pay back millions to customers who hd been sold payment protection on loans and credit cards, without their knowledge. Had compliance around this existed back in the lat 90s and early 00s, this would never have happened. Unfortunately however it did happen and this is why all of those companies and banks were forced to pay back as much money as they had to. What we can see here is clearly why compliance exists from a banking perspective, in that it protects the banks and lenders from making these kind of errors.
And finally this is about audit and tax protection for the banks and financial companies, this is mainly why compliance exists, in order to protect all parties involved within the financial landscape. It may certainly be a pain but the level of protection which compliance can offer really does make the process worthwhile.