It's interesting hearing from parties outside of the financial services markets that they perceive little has changed. In fact there is an overriding concern that we'll be back in the next financial crisis within 5 years (according to a survey on the forgotten crisis conducted by Complinet recently).
The story from our customers, who work in compliance for some of the world's most demanding financial services institutions, is quite different. What we're hearing is that the FSA in the UK in particular are carrying out their Arrow visits with more tenacity and a few surprises along the way.
Stories of short time lines and little notice before a visit begins and traders being nabbed on the shop floor and being asked who their designated compliance lead is and so on have firms wondering just how painful this proctological exam is going to be.
I suppose this difference between the perception that regulators are not really working any harder to prevent further transgressions and the reality that firms are biting hard as they prepare for what's coming (and in some cases what has come), lies at the heart of the PR challenge the financial markets now face.
In a lot of ways, financial markets still need to attract investment and that can sometimes be at odds with an overly burdensome regulatory market. However investors need to feel protected and consumers must regain confidence in the system if it is to recover in a sustainable way.
I remember failing my first driving test not because I didn't look in the rear view mirror before pulling out of the parking area outside of the examination center but because I didn't make it clear to my examiner that I had done so. It's not what you do that matters, it's what you are seen to do. And so the FSA must understand that there will be a need to communicate in an effective way, the changes they have made so that firms at least get some public recognition for putting in place the many new steps to avoid further transgressions.
We're putting together a webcast on preparing for a new type of Arrow visit. Keep checking our website, oh and keep looking in that rear view mirror.
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