What Does a Compliance Officer Do, and Why Are They So Important?
You might have seen the role of compliance officer advertised while browsing for jobs, or you may even have one within your own company. Not everyone is aware of the role they undertake, and the fact that this role can vary significantly from business to business. If you’re curious, if you’re thinking of pursuing a career or role in this job, or you think you might need a compliance officer, then read on.
At its simplest, a compliance officer’s job is to make sure that a company is following all of the external rules and regulations that has been given. These might come from industry bodies, international standards organisations, or of course the government.
There are lots of potential regulations that a business might need to be compliant with, and they can become extremely complex, which is why the services of a compliance officer may be required. In many cases, it will take an entire department to make sure that everything is running as it should.
Compliance can be required in many different ways, many of which are encountered day-to-day in any business, such as laws around health and safety and fire safety. In most cases, these considerations will be taken care of by more specific members of staff such as HR. Compliance officers are usually more concerned with industry specific legislation, such as following rules that the FCA has set in the finance industry.
It’s important to note too that there are often two different types of compliance officer that have slightly different responsibilities. These are as follows, defined by the International Compliance Association:
- Level 1: Level 1 compliance officers will be the ones who deal with making sure that the organisation as a whole, or part of it, are adhering to the external rules and regulations that are set.
- Level 2: Level 2 compliance officers however will make sure that the business, or components of the business, are sticking to the requirements of any policies put into place in order to make sure that those external regulations are met.
Sometimes the line between what is known as a level 1 and level 2 compliance officer can be blurred, and it’s not always easy to understand. In most cases you’ll find that job descriptions do not even reference the idea of levels, but it is nonetheless useful to understand that there are two sides to compliance. The first might set policy, where the second follows it, though they both go hand in hand.
Why They’re Important
Compliance officers are often so senior that they report straight into the COO or CEO. This is because the risks of non-compliance can be very significant indeed. Alongside financial issues, non-compliance penalties represent some of the biggest threats to the sound running of a business or organisation. It’s important to remember that most laws and regulations are put in place to protect people, other entities, and money, so there is a moral duty to be compliant as well as a corporate duty to protect one’s own business.
Financial penalties are usually the most common impact that result from non-compliance. Fines commonly come from the government if certain criteria are not met. GDPR for instance, which comes into effect in 2018 will affect most companies, has fines associated with non-compliance that run into the millions. Similarly, failing to receive accreditation from an industry body can lose a business many of its contracts.
In some cases, non-compliance can shut down a business, whether temporarily or permanently. In the food industry for example, if a business is found to be failing certain standards, it may be prevented from trading by the government until it complies.
And finally, at the most significant end of the scale, criminal convictions can be brought about. These are generally only in the most severe of cases where lives have been put at risk or worse, or if there has been major financial fallout.
For more information about compliance, and training to ensure that you understand whatever your responsibilities are, then click here to visit our compliance section. You can also browse our courses to see how compliance can affect anyone’s day-to-day career.