You are here

Regulations in the Netherlands overshooting the mark

  • Increased regulatory pressure gets in the way of efficient business management, compliance officers say
  • Compliance is gaining importance in the corporate sector
  • There has been a visible shift from ‘hard controls’ to behaviour and culture

Amsterdam, December 3, 2015 - Research among Dutch compliance officers by recruitment agency Michael Page shows that the increased regulatory pressure in the financial sector is threatening to overshoot the mark. 96% of respondents have seen increased regulatory pressure within their own organisation and 78% fear that these new rules are overshooting the mark and preventing efficient business management. Still, it’s not too late to stem the tide, says Mischa Voogt, Managing Director at PageGroup: when compliance is embedded in the right way, it can even give businesses a competitive advantage.

Compared to Anglo-Saxon countries like the United States and Great Britain, which are viewed as frontrunners in terms of compliance, the Netherlands has some catching up to do. However, we were one of the first in continental Europe to be confronted with incidents and the resulting fines, making us recognise the need to take compliance seriously at an early stage. This realisation was further enforced by the banking crisis which wreaked havoc here. “A blessing in disguise,” says Voogt. “Stricter regulations were needed to better protect consumers from the excessive commercial profits that various financial institutions were making. Considering the Netherlands started this process earlier than its neighbours, we’re now well ahead of the rest of continental Europe.”

Compliance increasingly important everywhere
The financial sector is not the only one dealing with an increased focus on compliance. The corporate world is also confronted with stricter regulations, and the - sometimes major - consequences of non-compliance with these rules. Yet the corporate sector is lagging behind the financial sector when it comes to implementing a well-functioning compliance process. A current and wry example of this is Volkswagen which recently shocked the world with the diesel scandal. “Unfortunately things often have to go wrong before adequate action is taken,” says Voogt. “Commercial organisations would do well to look at the financial sector to avoid such malpractice. If they fail to set up a proper compliance function, the damage to their reputation could be extensive.”

Culture and behaviour
The financial sector has now realised that it pays to look beyond simply enforcing regulations. Influencing behaviour is an equally strong tool to ensure compliance. An impressive 73% of respondents mentioned that behaviour and culture is going to be one of the most important aspects in their organisation in the coming time.  Voogt explains that “a broader approach is proving its worth in the financial sector, so the corporate world can take this on board when implementing compliance. In banks for example, we’re seeing a shift from ‘hard controls’, like a warning light when someone deposits 100,000 euro cash into their account, to ‘soft controls’, which are much more about behavioural change and ethics.”

Increasing demand for compliance professionals
It is clear that there will be a large demand for qualified compliance officers. Regulatory pressure is increasing in nearly all sectors and if organisations want to handle this successfully, they will need to bring in the right specialisms. Voogt says “smaller organisations will need to look for someone who has a broad educational background and can understand both the legal and the human side. What they need most is people with vision. How are you going to establish cultural change within the organisation? How will you get people on side? At the same time, this person needs to understand the nature and the ambitions of the business. In large organisations, you’ll see them hiring several specialists like behavioural psychologists and ethical philosophers, to complement the legal professionals already in place.”

From reactive to proactive
Voogt also notes a shift in the nature of compliance officers: from reactive to proactive. “Currently, legal departments in corporate businesses will wait until there is a problem and a file arrives at their desk, but it’s becoming increasingly important to think in terms of risks. That means venturing into the organisation and finding out where the risks are. Right now, there are often no strategies in place for when things go wrong, and people are just waiting for an incident to happen. Most financial institutions have made a lot of progress in this respect and adopt more of a risk-based approach.”

Competitive advantage due to compliance
Although 78% of compliance officers we surveyed fear that stricter regulations will get in the way of efficient business management, the solution is not in removing these rules, says Voogt. She advocates better embedding of regulations in the corporate processes of an organisation: “The US and Great Britain are dealing with much more regulatory pressure but people are not hampered by it as much in those countries. That’s mostly because this regulatory pressure has been around for much longer and processes have been set up more efficiently. So it wouldn’t hurt to take a good look at how people in these countries deal with compliance and learn from them.”