Goldman Sach’s £17.5 million to avoid further scrutiny of compliance practice – are we missing the point here?

Last week Goldman Sachs was forced to make a revealing choice between a fine and a potentially far more damaging critique of its compliance practices after a five-month investigation.  Their choice: the fine.  While someone like Goldman can afford this £17.5 million sanction from the FSA, it was certainly an interesting choice given that the fine is the second-largest in the firm’s history. 

With the FSA imposing nearly £84 million in fines so far this year - more than double the £35 million imposed on the whole of last year - the pressure on the financial services industry is set to keep up its momentum.  While this trend is much talked about in the press, it remains a mystery why organisations – especially such high profile ones as Goldman Sachs – appear to still need to get their compliance policies in place.

 In Goldman’s case, this was a pretty basic blip.  Had the company had established policies and systems in place to monitor communication and information sharing across the US and UK offices, they would have had no difficulty in informing the FSA of the SEC filing and would have steered well clear of regulatory scrutiny on this topic.

Although the company has managed to avoid a massive beating in the press by taking the fine over the probe, this case goes to show how fearful organisations are becoming of the reputational damage such investigations can cause.  It doesn’t change the fact that as long as companies are able to avoid FSA probes on their compliance practices, the less they’ll feel an urgent need to get their information governance houses in order – and the more their ever-growing information stores will continue to be at risk.

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