Effective Pushback Getting a Regulator to see Reason Without Triggering WWIII Presented by Stephanie A. McManus LL. B. Compliance Support Services June 2, 2011 Share the tools

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1. Understanding Perspective 2. Keep the Goal in Mind What’s Required 1. Understanding Perspective 2. Keep the Goal in Mind 3. Establishing Trust and Rapport 4. Patience 5. Resolution and Follow-up Share the tools

Understanding Perspective 1. Horses are prey animals, motivated by fear of being eaten by a predator. 2. Regulators are protectors of the public and motivated to fulfill that mandate in a visible way. So they have two fears: The public will be harmed by your actions or inactions; The Regulator will be held accountable for not having prevented the harm. Share the tools

Understanding Perspective 1. Horses are herd animals and will only relax and feel safe when they have a strong and competent leader. 2. Regulators are public servants. They will only feel they’ve kept the public safe and be able to relax when you’ve shown leadership and know what you’re doing in compliance. Share the tools

Understanding Perspective Their perspective has nothing to do with you. You need not take things personally – just get down to solving the compliance problem and getting back to your business. They don’t care how busy you are, how few staff you have to answer a request, whether your compliance manager is on holiday .... THEY DON’T CARE. So don’t expect them to and don’t waste precious energy and time trying to convince them to see how busy you are, how few staff you have, that your existing process is good enough etc. . Share the tools

Understanding Perspective Staff shortages How happy your advisors are or how much money your firm made. Cost of responding Technical problems ALL HAVE ONE THING IN COMMON.... They don’t care how busy you are, how few staff you have to answer a request, whether your compliance manager is on holiday .... THEY DON’T CARE. So don’t expect them to and don’t waste precious energy and time trying to convince them to see how busy you are, how few staff you have, that your existing process is good enough etc. . Share the tools

Understanding Perspective THE REGULATORS DON’T CARE! If anything, focus on these irrelevant matters will be a red flag to them that you haven’t got the infrastructure, resources or compliance culture needed to keep the public safe. They don’t care how busy you are, how few staff you have to answer a request, whether your compliance manager is on holiday .... THEY DON’T CARE. So don’t expect them to and don’t waste precious energy and time trying to convince them to see how busy you are, how few staff you have, that your existing process is good enough etc. . Share the tools

Keep the Goal in Mind “The object is to impose the handler's will without provoking an unmanageable confrontation with the horse.” Share the tools

Keep the Goal in Sight Share the tools What is an unmanageable confrontation with a regulator? It’s when they pull out the full weight of their authority to force you to address the issue the way they want you to. YOU CANNOT WIN, if it gets to that point. So don’t let it get to that point. Share the tools

Keep the Goal in Mind Answer their concerns: Address the investor protection issue cleanly and decisively and ensure there’s no way this is going to come back and bite them. And do it requiring the least amount of effort on their part possible. Solve their problem. Share the tools

Establish Trust and Rapport Trust is the foundation for all good relationships. Share the tools

Establishing Trust and Rapport Do not be defensive. Listen to them, without interruption. 3. Really understand their concern – top to bottom, back to front. (Hire someone to do this if you can’t see it). 4. Speak to the senior person – just trying to do a job – and demonstrate that you understand the issue. Have a conversation. Share the tools

Establishing Trust and Rapport Solve their problem with a process or solution that works in your setup. Be very detailed. Make reference to the rules or regulations. Show you’ve read other cases or material that’s relevant to the issue. Do the work now - it will save you work and time and money down the road. Share the tools

Patience Share the tools The Regulator does not understand your business like you do, so don’t expect them to. Sometimes junior staff with very little understanding of your business will be assigned to work with you. You may spend more time educating them than fixing your problem. Too bad. That’s part of fixing the problem. Remember that every hour you invest in resolving this problem is a deposit in your goodwill bank account with the regulator, available for future use. Share the tools

Resolution and Follow-up Once you come up with the solution you think will: a) solve their problem b) work within your business …give the whole thing to them in a face to face meeting. Take the time. The bigger the issue, the more important it is to address it face to face and early. Share the tools

Resolution and Follow-up Maintain the Relationship over time Think of them as one of your main business contacts. They have the power to: Shut you Down now Snuff out Your Future in the business So Keep them top of Mind If you make business changes, notify them. Not just on NRD but also, the regulatory staff person responsible for your file. Share the tools

Stacey Westfall Questions? www.compliancesupport.ca Outcome Championship Ride Questions? www.compliancesupport.ca Share the tools