On July 25, the Financial Services Authority (FSA) published its observations on good practices for managing compliance risk in major investment banks. FSA is promoting an integrated approach to the effective management of compliance risk that takes into account the size and complexity of a firm’s business and is based upon senior management engagement. FSA will refer to these good practices when engaging with FSA regulated entities.

The good practices are grouped into six areas: (i) having a clear understanding of what is meant by compliance risk, (ii) establishing a compliance culture, (iii) involving senior management, (iv) establishing a compliance risk assessment methodology, (v) compliance monitoring, and (vi) evaluating the effectiveness of compliance performance.