Compliance in the Maltese investment industry : a culture or a silo mentality?

Abstract

The 2007/2008 global financial crisis and the more recent LIBOR and foreign exchange benchmark scandals have put governance and culture standards across the financial services industry under the spotlight. Regulators are increasingly calling upon licenced entities to adopt a compliance culture into their business model. The study defined what compliance culture means in practice, devised ways how companies can foster a compliance culture and identified the benefits and challenges of adopting a compliance culture. The researcher tested the level of compliance culture in the Maltese investment industry and conducted a comparison to the compliance mentality within the investment sector of other European investment domiciles of choice. The research further sought to determine a compliance framework/ program that helps create and maintain a firm-wide compliance culture. This study concluded that there is a drive for the adoption of a compliance culture within Maltese Investment Firms and Investment Managers. Nevertheless, the latter need to ensure the practical implementation of this drive through adequate investment and consistent action in order to actually achieve the ultimate utopian compliance culture. The views from other European jurisdictions on the compliance culture within Investment Firms and Investment Managers seem to corroborate the findings of the compliance culture observed in the Maltese investment industry. The research further concluded that although there is no one-size-fits-all compliance program to achieve an ideal firm-wide compliance culture, there are common elements that should feed into every licenced entity’s compliance framework/ program irrespective of the size, nature, scale or complexity of the firm. The Author maintains that there are no failsafe compliance arrangements. Nevertheless, a step in that direction is the commitment by management to regularly reassess the interaction between a company’s formal compliance systems and its employees. Culture change takes time and requires investment - however it is achievable and worth the effort.