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Making Sure You Are Compliant When Working in the Finance Industry

Financial companies have a long history of needing to meet stringent privacy protection requirements. There are many different rules and regulations that are in place, which is why businesses need to invest considerable resources into compliance. With that being said, let’s take a look at financial compliance in further detail below so that you can get a better understanding.

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What is financial compliance?

There is only one place to begin, and this is by explaining what financial compliance is. This involves the regulation and enforcement of rules and laws within the capital and finance markets. It covers the complete financial industry, from retail banking practices to investment banking practices.

A mature approach to compliance risk management

Financial services have long followed a tried and tested approach when it comes to compliance management, which involves three lines of defence. These are as follows:

  1. Management control of frontline operations
  2. Risk management and compliance of oversight functions
  3. Internal audits

This mature approach means that the risk associated with managing data is less when compared with other industries.

Because of this, when the likes of the General Data Protection Regulation Act was introduced, the shock was not felt as heavily. This is because the financial sector has long faced regulations and massive fines in terms of data security and confidentiality.

Of course, this does not mean that compliance is not without its challenges. After all, the ever-changing landscape of the financial services sector means that there are always new risks and threats that must be addressed.

Challenges faced in terms of achieving financial compliance

There are a number of different challenges that these sorts of businesses face when it comes to compliance. This includes the following:

  • Ambiguity around best practice – Firstly, there seems to be some ambiguity regarding what the best practice is when it comes to compliance. This is especially the case when every extra set of rules seems to create a whole new list of best compliance practices.
  • Lack of skilled people – Another issue that a lot of financial companies face is that they do not have the skilled labor that is needed in terms of understanding compliance issues and technology. This is another barrier that has to be addressed. The challenges are only magnified when you consider today’s remote work environment, which is something we will address in the next section.
  • Difficulty in normalising data – Financial companies must have surveillance over a broad range of different kinds of data that go beyond trade data, for example, social media, chat messages, phone calls, and emails. It can be a significant challenge to bring all of this together.
  • Poor quality data – Some firms may not have cleaned up their data effectively, especially when different tools are being used. This causes reporting errors and poor quality data.

How does remote work impact compliance for financial businesses?

More companies are now working remotely than ever before. Thanks to the global pandemic and the lockdown rules and regulations across the country, a lot of people have been forced to do their job from home.

Of course, this is a trend that was gaining more traction prior to COVID-19. It is simply a case that the pandemic has accelerated this.

With more people working from home than ever before, there are now fresh challenges that need to be faced, and one of these is security.

Working from home brings a whole host of challenges from a security standpoint because you have no control over your workforce’s computer and device use. A lot of employees will be using their own devices, and this brings problems in itself because they will not have the correct security systems and tools installed on their system.

Furthermore, as you are not there to catch a watchful eye over their use, it is likely that they may end up using practices that do not do your company’s security much favors. So, what can you do to make sure that compliance is adhered to?

Well, you may want to consider making sure that all of your employees have effective security tools and software downloaded onto their systems. This includes the likes of firewalls, network segregation, multi-factor authentication, and much more.

It is all about figuring out what sort of security tools your employees are going to need to protect your pivotal data while working from home. You then need to ensure that the correct software is implemented in the remote work environment so that everyone’s online work is protected and secure.

Aside from this, it is worth holding remote training sessions so you can teach your employees about the importance of data security and the different steps that they can take to make sure that their system is compliant. A lot of individuals do not realize that they are acting in a way that could compromise the data of the business they are working for.

Therefore, education really is key. Hold remote training sessions that can teach your workers everything they need to know about everything from updating their systems to effective use of passwords. Don’t simply assume that all of your workers are aware of the best practices in this regard.

PAYE compliance considerations

Not so long ago, the government introduced new legislation concerning PAYE, which affected all intermediaries, with recruitment agencies included. An intermediary is an individual or agency that makes arrangements for a person to work for a third party. This is something your chartered accountant should have informed you about.

The new rules mean that all intermediaries now have reporting commitments in regards to non-PAYE employees, and these must be fulfilled every quarter. In instances where you do not operate PAYE on the workers’ payments, you need to return details to the HMRC. While this is required every three months, it is up to you how frequently you send and upload documents.

The new legislation is a clear message from the government that they are cracking down on those who are cheating their way out of paying taxes through reporting as non-PAYE, for example, as self-employed. It is the responsibility of intermediaries to take action and comply with the new rules that are in place.

But, how do you go about it? Well, the first thing that needs to be done is that you need to get to grips with the legislation that is in place. There are many ins and outs, and thus it would be wise to book an appointment with your accountant, or if you do not have one, now is the time to invest in fixed fee accountancy services.

Once you have got to grips with the new reporting rules that are in place, the next thing to do is demonstrate proactivity. You need to show that your business is aware of what is required, and that you are taking active steps to make certain that you are compliant.

You may think that it is better to hide your head in the sand and act none the wiser if questioned about the regulations, yet this is not advised. You need to show yourself as a credible and trustworthy business, and the only way to do this is to make an effort.

There is no denying that putting in the effort to report all of your non-PAYE employees can be time-consuming. However, failure to do this could bring about much bigger problems, and it is not worth the risk. After all, this is your responsibility, since you have the duty to provide all of your customers with the correct information about the workers you deliver.

When it comes to the payment status of workers, you need to supply sufficient information, and failure to do so could tarnish your reputation and you could miss out on business in the future. Why? Well, if you do not provide the proper information to HMRC, then they will treat the client as your worker’s employer for both national insurance and income tax purposes, and, needless to say, this is something your customers aren’t going to be very happy with.

Final words on being compliant within the financial sector

There is no denying that businesses face more challenges to the changing work dynamic that we’re in these days. Upholding compliance can be more challenging when all of your employees are working from the comfort of their own homes and using their own devices. This is why it makes sense to leverage managed IT and consulting services so you can be certain that you are operating in a compliant manner even though your workforce may be spread across the world.

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