Compliance Task Force Stresses Independence, Expertise and Customization
A Task Force created by the Independent Directors Council of the Investment Company Institute recently issued its report titled “Board Oversight of Fund Compliance.” The Report stresses the importance of an independent CCO, noting the benefits of outsourcing to a third party service provider “because of the inherent independence that comes with a CCO who has no ties or affiliates to the management organization” and the ability to “access the expertise of compliance professionals and the resources of their organizations.” The Report also noted the importance of ensuring a degree of independence when a person serves as both an adviser and fund CCO. The Report identifies 5 characteristics of a successful compliance program: (1) strong, ethical, and compliance-oriented tone from management; (2) a collaborative approach; (3) a tailored, risk-based program; (4) access to information and the ability to communicate compliance issues directly to the Board; and (5) effective people and resources.
OUR TAKE: As a compliance service provider, we have always stressed independence, expertise, and customization when designing compliance programs. We think all Boards and management teams should implement the Task Force’s recommendations.