Since the time Scott Tominaga, the chief operating officer of Partners Admin LLC has come into the business of financial advising. He has been a witness to the growing importance of compliance in finances. He has over 25 years of experience in the trade and by virtue of that. He can suggest the probable reasons why there is a need for compliance in finances.
Now, just like every other institution is run by rules and regulations that need to be adhered to. So does the world of finance too have certain guidelines and rules which one needs to abide by. This is basically what is meant by compliance. The following rules and norms are set by the governing bodies as a means of exercising discipline our compliance.
With the presence of numerous financial tools, it has become more important than ever to have compliance rules. That every business, small or big, must abide by.
Some of the reasons why it should be so are discussed:
- Ensuring discipline is the foremost reason for compliance, opines Scott Tominaga. It is when such compliance is attached to traders, banks, or other financial services that are kept in check. Previously, particularly in the arena of trade, there was not much compliance. As a result, the traders felt free to reign wherever and however, they wanted. They did not limit themselves in any way and this led to the growth of innumerable traders in the market. Thereby increasing the chances of fraudulence and chaos in the market.
- History has revealed that the resale of the poor mortgage after the inferior quality of repackaging led to a recession in the market in 2008 and a consequent collapse of the world economy. It is thus, as a preventive measure then that compliance plays such a crucial role. The banks and other loaning agencies have hence tightened their policies. And ensured compliance is a part of it under all circumstances. Non-compliance of any kind is not tolerated at all.
- The customer can remain protected by compliance to a considerable extent. There have been reports of lenders returning the money to customers. With compliance coming in, a customer can get their rightful dues and enjoys investment without much worry.
- The financial service companies and banks say Scott Tominaga too is safeguarded majorly with the inclusion of compliance. Although apparently, it may be a painstaking process, at the end of the day. It is a huge protective support to these financial institutions against any adverse effect that may be incurred upon them by any lawsuit.
There are primarily three types of compliance that any business entity ought to be worried about adhering to. These are namely, financial service compliance, regulatory and legal compliance, and IT compliance. However, compliances come with their own set of obstacles and hiccups.
Keeping up with the speed of consumer laws often poses a problem for businesses. Along with that protecting sensitive data, maintaining the costs of compliance, and fighting cyber-attacks are all among the other challenges. That one has to face compliance. That, however, does not undermine the importance of its inclusion in financial services particularly.