Compliance Program

A compliance program is a set of internal policies and procedures of a company to comply with laws, rules and regulations, or to uphold business reputation. A company will often have a compliance team that examines the rules set forth by government bodies, create a compliance program, implement it throughout the company and enforce adherence to the program.

Principal financial regulators are the Federal Reserve Board, Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA). These and others have established requirements that must be followed, where applicable and in varying degrees, by banks, broker-dealers, asset managers and other financial institutions. Compliance programs have grown in importance in the financial industry since the shock of the financial crisis, but vehement complaints of bankers have found receptive ears of Republicans in federal government. There have been concerted efforts to roll back regulations designed to keep some participants in the financial sector from overplaying their self-interested urges, but the push and pull of politics in D.C. make it unclear what changes, if any, will ultimately result.

Publicly-traded companies are supposed to have robust compliance programs to follow requirements set forth by the SEC. In particular, filing requirements and deadlines must be strictly adhered to. Compliance programs are also important, though less formally in terms of the law, at companies big and small, public or non-public. Where requirements of a regulatory authority do not apply, a compliance program of a firm addresses conduct of employees to abide by internal policies (e.g., spending corporate funds or treatment of women) and, more importantly, to maintain the firm's reputation among its customers, suppliers, employees and even the community where the business is located. Compliance departments have risen in stature due to their role in keeping their companies out of hot water with regulators, customers, shareholders and the general public.