This article contains information on compliance and regulation and answers the question “What is compliance?”.
What is Compliance?
Compliance means following a policy or rule – often fully and to the letter. In the context of business, this means following rules set up by either Government regulatory bodies, the Law together with the Government, Certification companies or Best Practices in the relevant business area.
Dictionary Definintion of Compliance
The action or fact of complying with a wish or command.
“The ways in which the state maintains order and compliance”https://languages.oup.com/google-dictionary-en
What is UK Business Compliance?
In the context of this website, we use the broad term to mean conforming to various rule groups such as:
- Best Practice.
- UK Law.
- Regulatory Bodies.
Within each of these are subsections. For example, within UK Law there are Health and Safety rules. If you don’t follow these there will be legal consequences.
However, within “Best Practice”, there are Health and Safety recommendations. These recommendations are not written into law. Therefore, following them will mitigate situations where you are likely to break the law.
What is Compliance in Regulation?
Regulatory compliance essentially is the law. A regulatory body is typically a government department. Therefore, if you set up a company that needs to follow regulatory compliance, you must follow their guidance. As a result, you will be assessed.
Often, if you are assessed and fail, you will be given an opportunity to perform corrective actions. However, this is very dependant on the nature of your business.
For example, banks, healthcare providers and media companies are covered by regulatory bodies. Once established, they will need to demonstrate regulatory compliance at set periods.
What is Compliance and Certification?
This is slightly different to regulation. Private companies can set up certification and this can fold into the law to some degree. For example, CHAS and NICEIC do not represent the UK Government, however, their certification maps to the law.
Therefore, it is in companies’ best interests to be certified in their industry by a popular body like CHAS or the NICEIC.
Without certification, businesses will not reach the compliance requirements for contracts. Also, they may not be able get business insurance.
In some situations, you can run a company without certification if you follow the law.
What Are Compliance Departments?
Larger companies have dedicated compliance departments and staff to ensure they are keeping up with regulation and certification.
The larger the company, and the more products and services it has, the more complex its compliance is. Therefore, it is not uncommon for larger organisations to have large compliance and risk departments.