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Compliance Function in Banks, Investment and Insurance Companies after MiFID

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Abstract

The risk of compliance comes from the failure to comply with laws, regulations, rules, self-regulatory standards, and codes of conduct. This article focuses on the evolving scenario of the compliance function within banks, investment and insurance companies operating in Italy. We developed four areas of research questions: (i) Does the positioning of the compliance function in the organizational structure start “at the top”? (ii) Are roles attributed to the compliance function coherent with the associated responsibilities? (iii) Do firms implement measurement methodologies to minimize their economic impact? (iv) Is the interaction between the compliance function inside and outside the structure appropriate for the aim of the compliance? Focusing on the first question, almost half of our sample are reporting to boards of directors. Regarding the responsibility assigned to the compliance function, the function itself feels the need for the compliance culture to be stronger and that it should be a priority. A significantly higher number of financial players have implemented methods to measure the risk. Regarding the interaction in/out of the structure, the vast majority of intermediaries believe that the compliance function could carry out an active role for innovative processes in investment services, but only a minority of the sample shows a virtuous situation of a connection between the value system and the compliance principles and the internal incentive system.

Suggested Citation

  • Musile Tanzi, Paola & Gabbi, Giampaolo & Previati, Daniele & Schwizer, Paola, 2010. "Compliance Function in Banks, Investment and Insurance Companies after MiFID," Journal of Financial Transformation, Capco Institute, vol. 30, pages 49-56.
  • Handle: RePEc:ris:jofitr:1465
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    File URL: http://www.capco.com/capco-institute/capco-journal/journal-30
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    Keywords

    Compliance; Banks; Insurance; Investment companies;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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