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Deloitte study shows companies want a culture focused on ethics and compliance

Firms want to integrate regulatory compliance functions and spread a culture of ‘doing the right thing’

2 November 2012

A new study from Deloitte, the business advisory firm, has revealed that over 90% of businesses want to see a cultural shift in the way they comply with regulations, such as those governing privacy and data protection, from ‘doing what they must’ to ‘doing the right thing’.

The report, A Path to Integration, shows that companies want to embed a culture where employees act ethically across everything they do and sets out the challenges – and benefits – of integrating their different compliance functions across the business.

Over 60% of companies surveyed said that this integration is an area that they will be focussing on in the next 12 months. As companies have reacted to each new regulatory challenge, the resulting compliance functions have operated independently of each other, wasting the opportunity for possible efficiencies. Integrating compliance across the business will allow companies to take advantage of these cost savings, as well as embed an ethical culture.

In recent years the UK has seen the introduction of enhanced regulations, such as the Bribery Act 2010, and a rapid rise in action being taken against firms under existing regulations like competition law.  Global firms are also having to deal with different regulatory regimes in different territories.  These factors and others have proceeded to push regulatory and ethical compliance right to the top of boardroom agendas. Encouragingly, the survey found that in nearly half (45%) of companies the compliance function reports directly to executive management. Such influence from the top level of management will be crucial in driving change and embedding a culture of ethical behaviour.

Tim Archer, partner in Deloitte’s Audit Advisory practice, said: “Overall the companies surveyed believed they are effective in complying with specific regulations, but they see the biggest challenge as creating an integrated approach to compliance.  Such an approach is characterised by an organisation whose employees are driven to comply by values - “the right reasons” - rather than rules - “must do it” - and supported by frameworks that allow their organisations to ensure compliance whilst managing its cost.  We believe the vision is possible and it is encouraging that we have seen compliance functions with the status to influence senior management. This high-level support will enable a top-down approach that will push the culture forward.”

Ends

Note to editors
Other key findings:

  • Compliance functions have only recently become a regular feature of many organisations. Indeed 95% of compliance functions we surveyed were established after 2001 and 64% since 2009.  
  • 86% of respondents stated increasing complexity of the regulatory environment or stricter enforcement of legislation were the main driver of changes and growth in compliance functions
  • 12% of respondents felt that their vulnerability to compliance risks had reduced in the past 12 months
  • 78% of respondents stated that their organisation had experienced at least one enforcement action in the last five years
  • Nearly 40% of organisations surveyed predicted significant or major changes to their compliance organisation over the next 12 to 18 months
  • Interestingly only 30% of organisations surveyed listed improving ethical compliance within their organisation as one of the current priorities. This suggests that the majority believe they are doing enough in this area already
  • 54% of respondents stated their compliance responsibility is spread across the business in the shape of divisions and business unit levels rather than seen as an exclusive Head Office responsibility
  • 57% of respondents are expecting the most significant increase in responsibility for compliance functions over the next 12 months to be around the development of “fit for purpose” compliance monitoring mechanisms
  • Compliance audits are currently deployed by 55% of respondents.
  • 27% of the organisations surveyed currently use risk and control electronic tools, highlighting potential gains for compliance functions by expanding their use of IT tools to support compliance monitoring activities
  • Although the survey results indicate a cultural shift towards highlighting the benefits of compliance, we are increasingly seeing organisations use the results of compliance monitoring and assurance mechanisms to promote and embed more ethical behaviour, rather than as a policing tool.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms. 

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.

Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. The information contained in this press release is correct at the time of going to press. 

Member of Deloitte Touche Tohmatsu Limited

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Name:
Ben Jun-Tai
Company:
Deloitte LLP
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Phone:
020 7303 6989
Email
bjuntai@deloitte.co.uk

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