Scott Tominaga – Why Compliance is More Important in Finance Than Ever Before
Last week we were joined on a web call with the brilliant Scott Tominaga, the financial guru who has been helping so many this year with investment advice and savings plans, not to mention the incredible work he has done with small businesses. We touched on a theme during that conversation which we wanted to get into a little bit deeper today, and that was about the importance of compliance in the financial landscape. Banks, lenders and investment arms have all been forced to clean up their act, more so in recent years than ever before, and here is exactly why it is so important.
Flouting the Rules
What happened in 2008, during the financial crash that destabilized so many global economies, was breaching of the rules. This was allowed to happen however because of loopholes which existed, loopholes which have now been closed. Ultimately bad debt was being packaged up together and sold as one, and like a house of cards it all came down. The financial institutions simply could not allow this to happen again and certainly in the last 2 decades this has ben the big driver behind the new and improved compliance rules that we are now seeing.
More a Business
Banks have always been a business but in the last 3 decades we have seen this more than ever before. The range of products that a bank or a lender sells is more than we have ever seen before and this is yet again why there is such a heavy focus on making sure that compliance is met. This is not only to protect the banks but also to protect the customer.
The PPI scandal was uncovered about 9 years ago and it found that banks and lenders had been selling payment protection insurance without getting the person borrowing the money to opt in. The result of this was a mass payout from banks and money lenders, giving back the money that they had taken surreptitiously from those who had taken out loans. Once again this was something which just couldn’t happen again and that is why things were changed so that there would be an additional level of due diligence when lending money.
Safeguarding The Business
Many think that compliance is all about protecting the customer but in reality it protects the company more than it does the client, and it projects them against wrongdoing, embezzlement and any lawsuits which may come their way. Thanks to compliance it is more difficult for the likes of a bank or a lender to commit any kind of criminal act or fraudulent activity and that is something which in reality does help us all.
Compliance and its many layers are absolutely essential in the world of finance and as the years progress and we learn more, we can expect the emphasis to grow and for more layers of compliance to be added.