Interview with Lisa Desjardins, co-founder of CLARITIS.
Published Oct 28, 2021 on allnews.ch.
No one is supposed to ignore the law. But the obligations imposed by Swiss financial regulations (LBA, LEFin, LSFin, LIMF, LPCC) and international regulations (UCITS, GDPR, MIFID II) have become a headache for financial players, who will soon all be subject to Finma. According to Claritis, a young company specializing in risk and compliance for local financial institutions, the challenge is to translate the regulatory arsenal into simple processes.
With many years’ experience in the financial sector, you co-founded Claritis in March this year. Who are your customers and why do they come to you?
We work mainly with small and medium-sized companies, as large corporations generally have their own risk and compliance functions. These are typically investment fund managers – collective asset managers as defined by law – asset managers and trustees, but also small banks. With the arrival of the LSFin and LEFin regulations, they will have to organize themselves to comply with the law, which aims to put all financial establishments on an equal footing, since until now asset managers were not regulated by Finma. Very similar to the European MIFID, the LSFin requires institutions to document a number of new controls on the financial services they provide.
Your customers include banks. Isn’t it amazing to see them outsourcing their compliance?
I’m not aware of any bank that outsources this function entirely, as the major establishments keep the expertise in-house. But in some cases, banks need a specialized resource to deal with a particular aspect of compliance. The largest establishments almost always have several full-time compliance officers. Outsourcing becomes interesting for smaller establishments that don’t necessarily have such resources. It is more advantageous for them to have access to a range of specialists for specific needs.
What are the challenges facing the SMEs you work with?
The big challenge for small plants is to translate the regulatory arsenal into processes that make sense for them. On the one hand, we have financial laws that are not very focused on the business of financial players. On the other, entrepreneurs with SME objectives who need to integrate these laws into their processes. It can be confusing. But Finma and financial companies do have common objectives: they both want to manage their risks, particularly reputational, and maintain healthy customer relations. Our role with these small establishments is to give meaning to these laws while remaining pragmatic.
Risk management is a very broad field, but what are the biggest risks facing banks?
When it comes to compliance, the main danger is breaking a rule without realizing it, due to the complexity of Swiss and international regulations. As far as operational risks are concerned, cyber-risks have recently come to the fore.
We often hear that the human factor is the biggest flaw. Is that true?
When it comes to setting up a risk management system, human error remains the crucial issue. The devil is in the detail, and even with the best of devices, if the reflexes of the company’s employees don’t follow, the control system won’t be fully effective. Hence the importance of employees perceiving that the controls in place make sense and are not disconnected from their reality.
