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Regulatory non-compliance is bad news for any business or brand, including ours. Paying a hefty fine is one thing, but the real cost comes in the form of reputational damage – plus the impact on customers and employees. At Expol, we understand the importance of staying compliant as regulations grow tougher by the day, which is why we’re focused on helping businesses rethink their approach to training.
We’ve all seen the headlines when a company gets hit with a major fine for breaching AML, cybersecurity, or other regulations. Each headline – and the damage it does to the public image of the business involved – is a powerful reminder of why it’s crucial to equip employees with the best training possible on these complex issues.
Of course, it’s always been essential to make sure employees have the skills and knowledge they need. But as the regulatory environment shifts towards tougher standards and larger fines, specialised professional training has become more critical than ever.
Here in the UK, news outlets frequently report on businesses counting the cost of regulatory breaches. Recently, the Financial Conduct Authority fined Starling Bank £29 million for what was described as ‘shockingly lax’ screening controls. Interestingly, the fine could have been over £40 million had the bank not received a discount for resolving issues identified during the investigation.
In today’s world, saturated with news and social media coverage, businesses face added risk from customer complaints that can trigger investigative journalism. Take Revolut, for example. Recently, the company came under the media spotlight after a BBC investigation focused on customer complaints filed with Action Fraud (the UK’s national fraud and cybercrime reporting centre). Regardless of opinions on this specific case, it shows that it’s not only regulators who scrutinise companies on compliance issues – journalists do, too.
Whether these investigations come from regulators or journalists, each case has its unique circumstances. However, in our experience providing risk mitigation and compliance training, we’ve noticed three broad trends in the UK and other regulated areas. These trends are essential for managers and employers to keep in mind when reviewing training options, especially for mission-critical compliance roles.
Firstly, we’re seeing regulators take a tougher stance on holding businesses accountable for breaches.
Secondly, increased news and social media coverage about big fines and investigative journalism serves as a warning to other businesses about the risks of non-compliance. UK regulators, for example, adhere to the principle that justice must not only be done but also be seen to be done. In this context, media coverage of fines and penalties acts as a deterrent, reminding other businesses of the consequences of falling short. Gone are the days when a fine could slip under the radar.
Thirdly, the challenges of compliance continue to grow. This isn’t just because of the complexity of legislation, regulations, and guidance, but also due to the sophistication of AI technology, which makes it increasingly difficult to identify cybercriminals posing as legitimate customers. This is especially relevant in sectors like finance, where KYC (know your customer) compliance is essential.
These trends underscore the value of investing in expert, professional training to avoid making headlines for the wrong reasons. It’s also worth noting that even when fines are imposed, demonstrating that a business took all reasonable measures to ensure compliance can sometimes offer some mitigation.
Summing Up
Reputations are hard to build but easy to lose – especially in a world where online communications spread bad news faster than ever. But headlines and news reports only tell part of the story. Whether it’s regulatory sanctions or intense media scrutiny, these cases often involve high levels of stress for everyone involved in the business, particularly those who must work hard to put things right. Investigations in sectors like UK financial services can drag on for years, and the time it takes to repair the damage is often even longer.
Those who’ve experienced investigations and fines for non-compliance will often tell you they wish they’d done more to prevent it. Unfortunately, as in home insurance, the value of investing in training is sometimes only clear after the roof has already fallen in.
