What must a firm ensure regarding regulatory compliance?

A firm must comply with relevant standards of the regulatory system because regulatory compliance is a fundamental requirement for all businesses operating within a given jurisdiction. This obligation ensures that firms adhere to the laws and regulations set forth by governing bodies, which aim to protect stakeholders, maintain market integrity, and promote fair business practices. Compliance with these standards also fosters trust and confidence in the firm from clients, customers, and the general public.

Regulatory compliance involves a comprehensive understanding of the applicable laws, codes of conduct, and best practices that govern a firm's operations. It is not merely an option but a requirement that must be integrated into the firm’s business practices, policies, and culture.

This compliance is essential not just for legal protection but also for operational sustainability and reputation management. Firms that neglect regulatory standards risk legal penalties, financial losses, and damage to their reputation, which can be detrimental in competitive markets. Overall, recognizing that compliance with relevant standards is mandatory helps firms better align their operations with regulatory expectations.