While every organization needs a strict compliance program and compliance policies, not everyone can afford compliance officers. Some companies hire in-house compliance and legal personnel; others hire outsourced chief compliance officers, legal teams, and compliance professionals.
The duties and responsibilities of an outsourced chief compliance officer vary according to the CCO services being offered. It also depends on the company, industry, and whether outsourcing compliance is a good idea for the company at the time.
In this article, we’ll take a closer look at the roles, duties, and abilities of an outsourced chief compliance officer.
What Does an Outsourced Chief Compliance Officer Do – Typical Roles in Organizations
Every company today needs a compliance program to ensure transparency with regulatory bodies. Bills such as the Dodd-Frank Wall Street Reform Act, the Foreign Account Tax Compliance Act, the Investment Company Act of 1940, the Investment Advisers Act, and more have changed the position of every firm’s compliance program.
For example, if a firm’s business is in the financial services, they would have to adhere to regulations on mutual funds, hedge funds, exchange-traded funds (ETFs), and other investment management opportunities. The Registered Investment Advisers (RIA) need to have a chief compliance officer if they need to continue their business.
It has become crucial for companies to adhere to SEC, FINRA, and CFTC requirements, especially when the OCIE (Office of Compliance Inspections and Examinations) keeps an extremely close eye on all companies. Even something as simple as filling out the mandatory Form ADV is required to be managed by someone in the CCO role.
All of the above is just for companies in the financial industry, specifically in the investment business. There are similar laws and regulations for every industry, and they all have their own ongoing compliance requirements.
That is why many companies have resorted to CCO outsourcing for all chief compliance officer services. An outsourced CCO typically works the same as an in-house CCO; however, their role depends on the company and industry. Most importantly, it depends on whether the broker-dealer CCO is an independent contractor or with a law firm or compliance company.
In any case, the outsourced chief compliance officer has to ensure regulatory compliance, enact enforcement actions on the compliance program, and do annual reviews of the organization’s compliance rules.
The outsourced chief compliance officer has to avoid any conflicts of interest and work directly with the executives and board of directors.
What Does an Outsourced Chief Compliance Officer Do – Duties and Tasks
When you outsource a prominent position such as the CCO role, you have to make sure you have lined up all the duties and responsibilities for them. That doesn’t mean you need to tell them your compliance issues; that will be the CCO’s job; you have to clearly define what they have to do at your organization according to your industry.
In any case, the following duties, tasks, and responsibilities are what the typical outsourced chief compliance officer has to manage.
- Work with and report directly to the Chief Executive Officer (CEO), the board of directors, and senior management. Offer advice and recommendations to the executives on all compliance functions.
- Collect and analyze compliance information and data from all stakeholders and internal/external systems.
- Check the business practices, operations, processes, and systems to ensure all compliance needs are taken care of.
- Provide assistance with compliance reporting to meet all regulatory requirements.
- Perform routine analysis on all compliance operations with the help of additional compliance professionals.
- Oversee, organize, and present scheduled compliance reviews that portray all compliance risks with the help of continuous risk assessments.
- Develop compliance manuals for all the organizational departments and employees.
- Ensure all marketing materials are acceptable by regulators and within the business model.
- Update any current compliance policies according to new regulations and organizational direction.
- Help establish risk alerts for compliance issues to develop an early warning system.
- Draft complete compliance and regulatory calendars to formalize the yearly compliance program.
- Offer continuous compliance consulting and support with any regulatory issues.
- Help new registrants (new companies) develop an understanding of the compliance world.
The duties, responsibilities, and tasks listed above are often part of the chief compliance officer services. However, you can include more tasks and duties according to your industry and organization.
What Does an Outsourced Chief Compliance Officer Do – Skills and Abilities
While outsourced chief compliance officers can have varying tasks and duties, they require the same skills and abilities. However, different industries may ask for slightly different qualifications and knowledge expectations.
On average, the outsourced chief compliance officer is expected to have the following qualifications, skills, and abilities.
- A bachelor’s degree in a law-related field is required. It’s preferable to have a Juris Doctor degree as it shows that you have an excellent understanding of the laws and regulations.
- At least ten years of experience is needed in law and compliance. It’s better to have prior experience in the same industry consistently, giving the CCO more insight into the regulatory requirements.
- Some companies prefer that the outsourced chief compliance officer passes industry-specific exams and certifications, such as the SEC exam.
- An excellent understanding and knowledge of all local, state, and federal regulations is required.
- The outsourced CCO is expected to have rudimentary computer skills. The CCO should have a strong understanding of Microsoft Office products, such as Excel, Word, PowerPoint, Outlook, and SharePoint.
- Outsourced chief compliance officers should have an idea of organizational compliance standards and how they work. It’s crucial to ensure that the client develops compliance-ready policies, benefits packages, and more.
- It’s crucial to have excellent research and analytical skills to find and analyze new and existing regulations, laws, and rules that may affect clients.
- As a service provider, the outsourced chief compliance officer needs to have strong management and functional skills.
- Excellent communication skills are needed to work with internal and external stakeholders.
- Outstanding interpersonal skills are needed to develop good relations with relevant authorities.
The skills, qualifications, and abilities listed above are what is expected from an outsourced chief compliance officer. It’s crucial for outsourced CCO’s to stand above and beyond to justify their role.
How to Become an Outsourced Chief Compliance Officer
Outsourced chief compliance officers are a cost-effective solution when companies don’t want an in-house CCO. However, it still doesn’t change how much a chief compliance officer earns over the year.
According to Glassdoor, the average annual salary for chief compliance officers in the United States is $149,943. That is true for outsourced chief compliance officers too. As a result, the typical salary range is between $83,000 and $218,000, with the upper end being offered in major hubs like New York and Los Angeles.
The outsourced chief compliance officer’s salary varies according to the industry too. For example, outsourced CCOs in the financial services industry tend to charge more per contract or per hour of consultation due to the increased complexity of compliance standards. Outsourced chief compliance officers in other industries that have less strict regulatory requirements may charge less.
However, all chief compliance officer jobs are considered to be at the executive level. Therefore, outsourced chief compliance officers need to have years of experience before offering their services. It’s advisable to work in an organization as an in-house compliance officer and CCO before offering outsourced CCO services.
Usually, smaller companies outsource their compliance matters. Therefore, it’s best to work towards getting experience at handling the compliance matters of smaller organizations. Furthermore, it’s also best to focus on any one single industry and build your knowledge base around it.
It’s also best to continually brush up on the latest updates related to new or modified laws, rules, and regulations. You should also consider developing a working relationship with regulators and the State Bar Association.
In any case, you should portray yourself as a dependable, knowledgeable, and reliable outsourced chief compliance officer.
Becoming a Great Outsourced Chief Compliance Officer
You can’t become a great outsourced chief compliance officer by only doing your due diligence. You need to rack up years of experience, understand the intricacies of various laws, and understand how to ensure complete regulatory compliance.
Developing good relationships with the relevant internal and external stakeholders, such as the board of directors and regulatory bodies, helps.
It’s also advisable to communicate with fellow compliance officers and attorneys and take their opinion while developing compliance programs and recommendations.
Most importantly, it’s critical to avoid conflicts of interest when working as an outsourced chief compliance officer.