Generally, compliance means that you comply with a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that organizations want to achieve in their efforts to ensure that they are aware of and take steps to comply with applicable laws, policies, and regulations. Organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls due to the increasing number of regulations and the need for operational transparency. This approach is used to ensure that all the necessary management requirements can be met without the unnecessary duplication of effort and activity from resources.
Compliance with regulations varies not only by industry but often by location as well. The financial, research and pharmaceutical regulatory structures in one country, for example, maybe similar, but with notably different nuances in another. These similarities and differences are often a product of “responses to changes in goals and requirements in different countries, industries and policies”.
Regulatory Compliance in India
In India, compliance regulation occurs across three strata: central, state and local regulation. India tends towards central regulation, especially of financial organizations and foreign funds. Compliance regulations vary according to the geographical mix according to the industry segment. Most regulations fall into the following broad categories: economic regulation, public interest regulation, and environmental regulation. India has also been characterized by poor compliance – according to reports, only about 65% of businesses fully comply with the norms.
Regulatory compliance is important to protect consumers and society. For many, this may seem like an abstract concept and far removed from their everyday experiences. It is a sobering experience to realize that the consequences of regulatory violations are not only financial but career-limiting. Directors of the company can go to jail. The regulatory pressure on companies is increasing as the regulatory rulebook continues to grow. This pressure is also driven by some high-profile bankruptcies.
Compliance with regulations is important for the following reasons:
- For the consumers, for them because of the harmful effects of business actions
- For businesses, to protect their brands and reputations
- For directors and executives, to avoid criminal liability and career termination
Companies that do not follow mandatory regulatory compliance practices have a number of potential consequences, such as being forced to participate in remediation programs that include compliance and site inspection by the appropriate regulatory agency.Non-compliant organizations are usually fined. Brand reputation can also be damaged by companies if that experience repeated – or especially dazzling – breaches of compliance.
Compliance with rules can be costly from an infrastructure and personnel point of view. As businesses need to spend capital to comply with compliance laws and regulations, they must also try to calm stakeholders and maintain business processes by making a profit. These financial compliance challenges are particularly acute in highly regulated industries such as finance and healthcare. Other challenges associated with the strategy, which are associated with maintaining regulatory compliance, include:
- Determining how emerging regulations will affect the business direction and the existing business model
- Incorporate and develop a compliance culture and promote this culture throughout the organization
- The decision on and appointment of compliance roles and responsibilities, as well as the compliance functions required by the legal, compliance, audit and business departments
- Responses to compliance trends and integration of regulatory processes that enhance efficiency
Consumer technology that is constantly evolving also has complications in practice for businesses. For example, the use of personal mobile devices by employees in the workplace creates compliance issues because these devices store sensitive, company data regarding compliance. The proliferation of the Internet of Things has led to tremendous growth in the number of endpoints and interconnected devices – and a lack of security for mobile and IoT devices creates vulnerabilities in the organization’s compliance networks. For digitized businesses to meet the requirements, they need to keep abreast of the required updates and resolve the existing software immediately when vulnerabilities are detected.
Data retention is part of regulatory compliance, which is a challenge in many cases. The security resulting from compliance with operating regulations may be contrary to the maintenance of user privacy. Owners and other service providers are required for data retention laws and regulations to keep extensive records of user activity beyond the time required for normal business operations. Private law lawyers questioned these requirements.
Regulatory compliance is meant to protect against the harm which is caused to society and consumers. It helps in ensuring that such a protective layer exists to defend against such harm and to maintain law and order by ensuring that the organizations are aware of such regulations and have to comply with it. The article even lays down the challenges against such compliances in this modern digital world.
Edited by Pushpamrita Roy
Approved & Published – Sakshi Raje
Silveira, P.; Rodriguez, C.; Birukou, A.; Casati, F.; Daniel, F.; D’Andrea, V.; Worledge, C.; Zouhair, T. (2012), Aiding Compliance Governance in Service-Based Business Processes, IGI Global, pp. 524–548
Malyshev, N. (2008). “The Evolution of Regulatory Policy in OECD Countries” (PDF). OECD. Retrieved 27 July 2018.
“India Inc has poor record in regulatory compliance | Latest News & Updates at Daily News & Analysis”. 2014-10-12. Retrieved 2016-09-18.