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Business Review 2006 from
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Regulations: Ignore them at your peril
Mathew Beale
managing director, Comsure
Ignoring business regulation is not an option. Non-compliance with a regulatory regime is likely to, at best, have a detrimental effect on the reputation of a business. At worst, it might result in fines, loss of jobs or even imprisonment.
We can clearly see that both private and public sectors in Jersey face a rapidly growing compliance burden.
Winning and transacting business in the commercial world, and delivering services in the public sector, have never been more complicated in terms of the regulatory minefield that surrounds these activities.
Rising expectations of regulation go to the heart of what is driving businesses in 2006 and beyond. The bar is forever being raised and what once worked previously is now no longer adequate.
As we have already seen in the local and national news, a number of executives have appeared in the courts on charges relating to failures in their businesses. These charges have, in some instances, led to custodial sentences and/or fines.
It is clear that, as the world changes, so to does Jersey.
The risk/ blame culture is spreading. Regulatory bodies, service users and providers expect more protection to meet these developments and the State is obliging accordingly.
Growth
We are seeing a spectacular growth in the number of regulatory requirements affecting day-to-day business activities and our individual rights.
Just think of the following non-exhaustive list of laws with which businesses are likely to have to comply in Jersey:
1 Companies;
2 Competition;
3 Data protection;
4 Employment;
5 Financial services;
6 Health and safety;
7 Undertakings and
development;
8 Tax.
As the burden on businesses increases, we are seeing the bodies charged with administering and managing the above requirements showing a growing assertiveness and willingness to take enforcement action. They are doing this by meting out fines and punishments to non-compliant companies and individuals.
It is therefore imperative to the success of an organisation that it is in a position to comprehend and assimilate regulatory change in a manner that ensures both compliance and the future of the business or delivery of public services. For many organisations, this may require a level of investment in resources and rigour in business processes that has previously been thought unnecessary.
Although it is possible to obtain hard information on, for example, employment law or data protection from an internet search engine or a training session, what is not so readily available is the ability to distil the information.
You must be able to understand how the information is relevant for your particular business, particularly how to apply best practice and how these needs impact on your business in the context of its own unique compliance burden.
Accords
The compliance burden may take a number of forms. Most obviously it will be legislative, in the form of statutes or statutory instruments, but it could also be in the form of international accords, such as the Basel II Accord for the banking sector.
Further to this, some aspects of business are regulated by a combination of different means; for example, corporate governance is regulated by a combination of statutory rules and self-regulation in the form of codes of best practice.
A common complaint of businesses, particularly those operating in highly regulated sectors - such as the finance sector - is the difficulty of drawing all of the strands together to enable the business to assess its exposure to risk.
A classic example is the Proceeds of Crime (Jersey) Law 1999 and the Money Laundering (Jersey) Order 1999. Both are concerned with the topic of money laundering, but the relationship between the two pieces of legislation is, to some, not clear.
What all of this means is that organisations, their directors and senior managers need to be aware of the regulatory risks which they face.
They also need to understand the nature of the legislation, regulation, codes of practice, standards, and industry guidance that impinge on their business and the performance of their functions, and delivery of services.
Only with that knowledge can they assess the steps that need to be taken to reduce their exposure to risk.
So in today's highly regulated and very fast-moving society, 100% compliance with all of the regulatory regimes might appear to you to be almost impossible to achieve.
However, being compliant will always pay you dividends.
After all, you like me probably prefer to conduct business with others who respect the letter of the law, as well as making an honest effort to comply with.
So for you to ensure a successful life in business, you should try your very hardest to understand fully what you and your business is required to do and how you are going to achieve it.
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