Role of the Regulatory Liaison Office

Managing Regulatory Relationships – do you need a Regulatory Liaison Officer?

The tsunami of regulations developed over the past 20 years has made it increasingly challenging for regulated businesses to manage their compliance processes.  We immediately think of internal compliance training programmes for staff, but what about the overall organisation’s regulatory management?

Businesses may operate under several regulatory licenses, such as a bank, fund, trust company or funds services business.  They may also work in multiple countries and must comply with regulations in each country.

So how best to manage those relationships?  It’s not just about complying with the regulations but also ensuring good relationships with the various regulators who supervise your business.  A regulatory liaison or regulatory affairs role has developed in many organisations, whether a single person is responsible for the regulatory relationship or an entire regulatory liaison office.  The role’s size and scale depending on the number of regulatory regimes and regulators with whom the organisation works.

Global institutions with multiple regulators operating under numerous regulatory regimes will likely have an entire group dedicated to ensuring smooth relations with those regulators.  This team may be a separate function called the Regulatory Affairs team.  Businesses that operate under a single regulatory authority and regulator will likely appoint one person responsible for the relationship with that regulator.  The role may be part of the Compliance or Legal team.   If an organisation has a Chief Regulatory Affairs Officer, that role is typically part of the Executive Board alongside the CEO and other senior management team members.

The objectives of this team are to develop and maintain strong relationships with regulators and keep the Board apprised of the results of any regulatory reviews and anticipated significant regulatory changes that might impact current and proposed business activities.  It is also responsible for ensuring successful review and meeting outcomes with regulators.  Typically, this team coordinates all interactions with regulators to ensure a consistent and focused organisational approach.  It also arranges and manages all regulatory review and supervision meetings with regulators.

Regulatory Affairs needs to work seamlessly with the Compliance function to ensure internal processes meet all regulatory requirements and that tracking of meetings with regulators is in place.   It also monitors internal processes to ensure timely submissions of responses to regulators.  If the outcome of regulatory reviews requires changes to internal processes, Compliance and Regulatory Affairs will need to manage those changes closely.

The Regulatory Affairs team should also monitor new and anticipated regulatory changes to ensure no unanticipated changes are necessary to current and future business strategy when new regulations arise.  It should regularly update the Board and Senior Management team on upcoming regulatory changes that might impact business operations and strategic objectives.

Trackers and Dashboards will highlight the status of regulatory meetings and outcomes, issue management, and show progress on deliverables.   Depending on the size and scale of your regulatory interactions, you may need several different ones.  A smaller or less regulated organisation may be able to consolidate them into one or two specific tracking and reporting tools.  The key is to stay on top of any requests and reporting requirements to ensure streamlined relationships with your regulators.  We’ve included a list of the trackers and dashboards we’ve used in various organisations:

• A supervision tracker- to monitor regulatory requests during current reviews and meetings with your regulatory supervisor
• An issue tracker captures issues from various sources, including Legal, Compliance, Audit, individual businesses, or the Regulatory Liaison Office.
• A regulatory pipeline tracker tracks anticipated legislation that may affect the organisation.
• Dashboards highlight regulatory interactions with examiners, key regulatory findings, and other regulatory environment changes to report to management and the Board.
• An organisation-wide oversight of regulatory relations ensures effective monitoring of examination activities and identifying and escalating issues to senior management.

The Compliance Department typically manages policies and procedures to ensure compliance with the organisation’s regulatory requirements.  Regulatory Affairs should work closely with the Compliance team on a forward-looking basis to ensure that existing policies cover upcoming regulatory changes or that policies and their related procedures are updated to meet new legislation requirements.

What about smaller organisations?  You may not have a Regulatory Affairs Department or even a Compliance department.  Still, someone in the organisation should be the central point of contact for compliance and regulatory liaison and maintain trackers to ensure compliance and up-to-date reporting are supported.  As with a larger organisation, Senior Management should regularly update regulatory relationships and compliance programmes.

Holistic compliance and regulatory programmes ensure that your business meets its regulatory requirements and provides certainty about meeting your strategic objectives.  Next time, we’ll look at preparing for and managing meetings with your regulators.

You can find more articles on our website, at Phundex Knowledge Hub, on LinkedIn at Phundex LinkedIn, or for other questions, please email us at:  hello@phundex.com.

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