Strategies to successfully manage Brexit (with the help of digital compliance tools)
Brexit illustrates a classic example of the old proverb: one does not need to predict the future, but to prepare for it.
“We will have to wait and see what the consequences will be for the compliance community,” this article suggests, “as many of the topics will be subject to negotiation as part of any deals for the United Kingdom to retain some of its access to the common market in Europe. For specific legal areas, however, the impact could vary greatly.”
When talking about Brexit, it is seemingly ok to remain vague. And while this may not be the most recent or substantial perspective, it highlights a valid point that we tend to repeat: In today’s fast-changing regulatory environment, responsiveness is everything.
(In fact, Brexit is only one of many examples. Our recent e-book covering cross-border client interaction planning proves the very same point. You can download it below.)
Brexit, Passporting Rights and Data protection
Let’s take a look at what it means to be prepared, despite regulatory complexities. There are many examples, but for now, let’s focus on passporting rights and data protection.
Passporting Rights — European law gives EU Member States full access to the Single Market. Meanwhile, third-country (outside the EU) firms are required to open an EU branch in order to get the same benefits.
This made life easy for UK-based financial institutions as well as non-EU ones relying on a London-based subsidiary. However, with Brexit coming into effect, these financial service providers might no longer be able to passport their services across the EU like before. Organisations will likely encounter increased costs and complex procedures when operating in the EU, particularly when dependent on multi-state authorisation and where the scope of services is subject to pending political decisions.
Data Protection — Owing to the extra-territorial reach of the GDPR, its provisions will continue to apply to UK companies offering goods and services (including financial services) to EU citizens, even after Brexit.
UK national standards are comparable to other EU countries. As such, equivalency is unlikely to involve any bigger efforts and the country will most likely be whitelisted for transfers outside the European Union.
However, no one knows entirely what is around the corner. Brexit may cause changes to how data can be accessed and controlled, and equivalency rules will still need to be reviewed.
How to prepare for Brexit, properly
If things seemed vague above, we did it on purpose. The point we want to make is not clarifying Brexit impacts for area A, B or C, or to even pretend we know its precise outcomes. Quite the opposite.
In today’s rapidly evolving world, we think that one can only prepare for the future, not predict it. In such a climate, we recommend providers of financial services to:
- Maintain a unified repository of digital compliance rules. Organisations need to maintain their regulatory knowledge in a unified repository of digital compliance rules, enabling full transparency and control over rules in action. Only then can they keep their compliance expertise up-to-date, verified and distributed across business functions.
- Allow for easy access to compliance knowledge. Everyone in financial institutions should have immediate access to compliance knowledge. Replacing jargon and ambiguity with binary, yes-or-no answers, all relevant staff — client advisors, research personnel, marketing professionals, product officers, and many more — get clear regulatory guidance, without putting a strain on the already limited resources of the legal and compliance departments.
- Automate compliance wherever possible (compliance by design). Embedding digital compliance rules into the workflow ensures compliance automatically and on-the-go. Adopting compliance by design also minimises the risk of human error and the need for active monitoring and quality control.
While the above might sound impossible, it is actually not. The Apiax Platform empowers financial institutions to keep a unified, up-to-date repository of digital compliance rules. Through our App and API, regulatory frameworks, as well as internal policies, can be delivered as binary yes-or-answers across business departments.
We integrate binary compliance rules in a multitude of processes for our clients. Click on the image below to download a guide of how this could be used to manage Brexit successfully.
Compliance is a never-ending job. Regulatory requirements are in constant change and Brexit is just one reason why the scope and volatility of regulation have increased recently.
At Apiax, we want to make compliance easy, lean and efficient. To support this, we develop sophisticated tools to master complex financial regulations digitally.
If you want to learn more about how we can support your business, schedule a meeting with one of our RegTech specialists.
