Consumer Duty and fair value: where are you now?
There has been some speculation that MiFID II will require compliance professionals to develop
There has been some speculation that MiFID II will require compliance professionals to develop complex technical skills alongside deep subject-matter expertise. We examine the reality of this predicted rise in ultra-niche, tech-savvy compliance officers.
MiFID II presents both a compliance challenge and a technical one for compliance officers, they must have the niche knowledge of the compliance rules, but also need to have a good level of technical expertise alongside this. The industry needs to wake-up to the need for technical know-how alongside the more traditional skill-set, otherwise the gap between regulation and technology will continue to grow.
This gap is particularly evident when we look at the growing field of automation, which is being used by firms to streamline processes and reduce costs. Compliance professionals need to have a detailed understanding of the limitations of any automation tools being used and get involved in the development, rather than leaving it to the technology experts.
For the technologists, regulatory rules are just another language to learn, so they are able to pick this up a lot quicker then regulatory or financial experts are able to pick up the technical aspects, but it’s important not to be left behind. You know the rules; the question is, how to code them and test whether the right outcomes are being produced. Compliance needs to be part of the process, if not, there’s the danger that you could lose the regulatory person, because it’s the technology department coming back year on year to determine whether the rules are being complied with.
As for the emergence of ultra-niche compliance officers, the complex parts of MiFID II do require subject matter expertise, but in larger firms it is more likely that future compliance teams will be headed by a general practitioner, with subject matter experts (SMEs) working under them.
Ultimately, the complexity already exists within the business model, which the compliance function should already have a good handle on this. The MiFID II framework simply shines a light on it and requires greater evidence of a much wider range of practices and functions, adding another layer of analysis onto already potentially complex business models.