What is compliance culture and why is it important?

A. Overview

B. Introduction

34. A commitment to compliance is the cornerstone of responsible, ethical and professional practice for the architecture profession.
35. A range of consequences could occur in the absence of such a commitment, including poor client-architect relationships and designs that do not meet clients’ needs or have adverse environmental or social impacts. In some cases, neglect of compliance responsibilities could even result in unsafe buildings and generalised erosion of public trust in the built environment.
36. This chapter explores what a commitment to compliance means in practice for the architecture profession by delving into the concept of “compliance culture”.

C. What is “compliance culture”?

37. Understanding what compliance culture means is crucial because it forms the foundation of a commitment to compliance and helps to clarify what this entails in practice.

Culture affects mindset; a strong compliance culture reinforces a compliance mindset

38. Culture is the cumulation of values, attitudes, habits, assumptions, expectations, and aspirations that shape everyday actions, decisions, and strategies.[7] Compliance culture relates to how these aspects affect adherence to legal, regulatory, and ethical obligations.[8]
39. Culture affects mindset, which influences how individuals interpret and respond to situations.[9] Compliance mindset reflects an individual's internalised commitment to understanding their obligations, making decisions lawfully and with integrity, and generally doing the right thing, even in the absence of oversight.
40. Compliance culture and compliance mindset are intrinsically linked. A strong compliance culture helps to reinforce a compliance mindset in the following ways:

• In the case of sole practitioners and small firms – when an architect consistently prioritises personal commitment to professional and compliant behaviour through their practices and decisions, this strengthens and embeds a compliance mindset into the fabric of their work.
• For larger firms – when leaders of an organisation consistently model and reward professional and compliant behaviour, individuals within the organisation are more likely to adopt a compliance mindset.

41. Similarly, a professional approach that is shared among an organisation’s staff helps to sustain and strengthen a positive compliance culture within the organisation as a whole. Conversely, where professionalism is absent, compliance culture is likely to be weak and commitment to compliance among individuals may be more superficial.

A compliance mindset is more likely to produce compliant behaviour

42. A culture that cultivates a compliance mindset is more likely to produce compliant behaviour.[10] Such a culture exists when adherence to laws, ethical standards, and organisational policies and procedures is ingrained in the values, operations, behaviours and decisions of individuals within the organisation.[11]
43. Among other things, a compliance mindset involves:

• a commitment to learning about compliance requirements;
• an acceptance of responsibility for addressing compliance risks;
• a vigilant approach in daily tasks to identify and document compliance issues; and
• a commitment to choosing a compliant pathway, notwithstanding the incentives and rewards that might exist for doing otherwise.

44. Developing a compliance mindset can take time.[12] A constant investment of time, resources and effort is needed to deeply embed and normalise a compliance mindset. Failure to do so may mean that a compliance mindset dissipates quickly.[13]

A compliance mindset depends upon a thorough understanding of the scope of compliance obligations that apply

45. A compliance mindset critically depends upon a clear and thorough understanding of the compliance obligations that must be met.
46. The Code of Professional Conduct requires architects to comply with “all applicable laws” in providing architectural services.[14]
47. Each law, standard or other instrument that applies may require detailed and technical knowledge and understanding in order to ensure that compliance occurs.[15]
48. If compliance obligations are not well understood, this could lead to unintentional non-compliance and can also undermine the compliance culture.
    

D. Why is compliance culture important?

A strong compliance culture helps to ensure the effectiveness of the regulatory framework to minimise the risk of harm

49. An effective regulatory framework is one that achieves its objectives.[16]
50. In the case of the regulatory framework applicable to architects and architectural firms, this means that the framework ensures that those who provide architectural services are registered or approved by the ARBV and comply with professional standards. This, in turn, will help to ensure that clients, the public and the profession are protected from harm.
51. The following important elements need to be in place to achieve these outcomes:

• the regulatory framework must be comprehensive, clear, well designed and robust;
• the regulator should direct its regulatory activities at compliance issues and regulated entities that pose the greatest risk of harm; and
• a culture of compliance should exist among regulated entities.[17]

52. As explained below, all three elements are the focus of the ARBV’s attention. However, this report predominantly concerns the last element – compliance culture.

Regulatory framework

53. In relation to the first element – the regulatory framework – the Code of Professional Conduct is a regulatory instrument that is designed to shape compliance culture among architects and, more specifically, to create a compliance mindset within the profession.
54. It does this by embedding values of professionalism, client-focused service delivery, and ethical integrity. It also helps to cultivate a strong compliance culture by seeking to ensure that transparency and accountability are at the core of architectural practice.
55. The Code of Professional Conduct is due to sunset in the foreseeable future and its reform is underway. Among other things, reform will be directed at making architects’ compliance obligations in the Code as clear and unambiguous as possible and as relevant and meaningful across the spectrum of circumstances in which architects and architectural firms provide architectural services. This, in turn, will help to support architects to comply.

Regulator

56. As for the second element – the effectiveness of the regulator – the ARBV has developed a comprehensive risk-based proactive regulatory strategy. This strategy is designed to support and assist entities to comply with their obligations under the regulatory framework and to prevent non-compliance and harm from occurring.
57. The strategy outlines a range of proactive initiatives, including education of and engagement with architects and architectural firms, as well as research and thought leadership about compliance risks facing the architecture profession.
58. The strategy also includes a regulatory reform agenda to enhance the effectiveness of the regulatory framework. This agenda supplements the sunset review of the Code, which the ARBV is actively involved in.
59. That strategy will be complemented by future initiatives to strengthen compliance culture, which are based on the findings in this report.

Compliance culture

60. This report concerns the third element that is essential to maximise the effectiveness of regulation – namely, the culture of compliance within the architecture sector.
61. The primary responsibility for shaping a culture of compliance rests with architects and architectural firms. This starts with an unambiguous embrace of their compliance obligations and broader professional duties.
62. While members of the architecture profession are primarily responsible for fostering a strong compliance culture, the ARBV is committed to assisting architects and architectural firms to do so. This commitment is evident from its Strategic Plan 2022-2026, which notes that one of the ARBV’s strategic objectives is “to drive positive outcomes for consumers by promoting a professional culture of accountability among architects”.[18]
63. This strategic objective is supported by the current ARBV Ministerial Statement of Expectations, which requires the ARBV to improve architects’ compliance by targeted regulatory activities and education to support behavioural change and encourage voluntary compliance.[19]
64. The ultimate purpose of the ARBV’s initiatives regarding compliance culture is to support compliance with the regulatory framework. These initiatives are designed to minimise the risk of non-compliance by architects and architectural firms. This, in turn, serves to protect clients, users of architectural services and the profession from harm.

E. What are the benefits of a strong compliance culture for architects?

65. There are important benefits for architects and architectural firms that invest in a strong compliance culture. Recognising and valuing these benefits is essential to sustain a lasting commitment to compliance.

A strong compliance culture mitigates compliance risks and may be looked upon favourably by the ARBV if non-compliance occurs

66. A strong compliance culture helps identify and address potential compliance risks before non-compliance occurs. A sound compliance culture may also be taken into account favourably by a regulator in cases where non-compliance does occur.[20] Notably, the ACCC has successfully argued that the courts should take into account whether a business has implemented a compliance system, and if so, its quality, in determining penalties in its prosecutions for breaches.[21]
67. In contrast, a failure to manage compliance risks effectively may lead to regulatory consequences under the regulatory framework, financial costs to respond to any regulatory action, and reputational damage.[22] In some cases, non-compliance could result in the suspension or revocation of the right to practise as an architect. In addition, a history of non-compliance may attract closer regulatory scrutiny and a more severe regulatory response for any future non-compliance.[23]

Trust, reputation and credibility can be enhanced through a commitment to compliance

68. Compliant architects and architectural firms may be perceived as conducting their businesses with integrity. Consequently, a strong compliance culture can help to build trust with clients, regulatory authorities and other stakeholders, such as other participants in the broader construction sector.[24]
69. A positive compliance reputation can also help differentiate and distinguish architects and architectural firms in what is a competitive market for architectural services. Clients and other participants in the construction sector may be more inclined to engage architects and architectural firms that commit to and demonstrate compliant and ethical practices. In addition, architectural firms that are known for having a strong compliance culture may be better placed to attract the best employees.
70. In comparison, a weak commitment to compliance can cause both immediate and long-term damage to an architect’s or firm’s professional brand. In the short term, non-compliance may lead to regulatory action, published disciplinary outcomes, and the reputational fallout, which can erode client trust and disrupt business relationships.
71. The long-term impact can be even more significant. Given today’s digital landscape, once reported, compliance breaches may remain permanently accessible through media coverage or online searches, even after the compliance issue has been fully resolved. This lasting visibility of non-compliance can continue to influence client perceptions, limit future business opportunities, and undermine professional credibility for years, regardless of subsequent improvements in compliance practices.

A commitment to compliance can also promote growth

72. Some within the architecture profession may view compliance as a constraint on creativity or a cost burden. However, in fact, a commitment to compliance may support long-term sustainable growth.
73. More specifically, a commitment to compliance helps to enhance an organisation’s value proposition by demonstrating integrity, reliability and professionalism.[25] These qualities can generate more business opportunities among clients and business partners that value them.
74. A commitment to compliance can also result in streamlined processes to ensure effective management of compliance obligations. This can improve operational efficiency.[26]
75. On the other hand, a weak commitment to compliance can threaten long-term growth. Without a clear focus on compliance, individuals and organisations may be exposed to legal, financial, and reputational risks that can destabilise business operations and erode client confidence.

There could be benefits for employee morale and performance

76. The culture within an organisation can have an impact on the morale of employees.[27] It can also affect employee performance.[28]
77. An environment where compliance with the law and ethical standards is consistently upheld may help to foster a transparent and trusting work environment.
78. Employees working in a compliant environment may feel more secure and confident in engaging in behaviour and making decisions that are lawful and ethical, compared to organisations where compliance is not prioritised. In addition, by prioritising compliance, organisations may enhance teamwork and productivity.
79. In comparison, a poor compliance culture could have a significant adverse impact on staff morale and retention. This is particularly the case in professional environments like architecture where ethical standards, integrity, and quality are highly valued.
80. When compliance is neglected or inconsistently enforced, it could create confusion, stress, and frustration among employees who are trying to meet professional obligations without clear guidance or support.
81. Over time, such an environment could lead to disengagement and reduced motivation, particularly among staff who value ethical practice and professional excellence. Talented employees may seek opportunities elsewhere in firms where compliance is taken more seriously.

A strong compliance culture within the architecture profession could enhance the culture within the broader construction sector

82. The construction sector includes a wide range of other participants, including clients, developers, builders, engineers, building surveyors, product suppliers, and a variety of other bodies that regulate these participants. Each plays a critical role in shaping outcomes in the sector.
83. When these participants prioritise compliance and ethical practices at the individual and project levels, they help to ensure that buildings are safe, durable, and high-quality. The opposite is also true. A poor compliance culture among participants in the broader construction sector can increase the risk of non-compliance, undermine public confidence, and lead to poor built outcomes.
84. A strong compliance culture among the architecture profession can have a ripple effect across the broader construction sector by setting a clear standard of professionalism, accountability, and ethical conduct.
85. Architects may occupy a central and coordinating role in some construction projects. When they consistently demonstrate a commitment to compliance, this may raise expectations or encourage similar behaviour from other sectoral participants with whom they collaborate. This can, in turn, promote safer, more sustainable, and legally sound outcomes for all project participants.
86. However, the absence of a commitment to compliance may damage the architect’s credibility, undermine collaboration, and may contribute to a poor compliance culture among all project participants. This can lead to increased risk of legal breaches and exposure to regulatory sanction or civil litigation. Safety standards could also be compromised and the quality of the built outcome could be diminished.

F. Concluding remarks

87. A compliance culture goes beyond technical adherence to compliance obligations and involves a proactive ethos of doing what is right.
88. An understanding of the concept of compliance culture is critically important for the architecture profession, including sole practitioners, small firms and large firms. Such an understanding can shape how professional obligations are internalised and acted upon in practice.
89. Sole practitioners and small firms do not have the support structures of a larger organisation that could facilitate compliance. Nevertheless, a compliance mindset – which is at the core of the concept of compliance culture – helps to instil a commitment to compliance notwithstanding the absence of such support.
90. In the case of larger firms, a strong compliance culture can ensure that a commitment to compliance is embedded across the organisation. It can align the approach to compliance among diverse teams and for different types of projects.
91. In both contexts, understanding compliance culture means recognising that compliance is not just about avoiding regulatory sanction for non-compliance. Rather, it is about fostering lawful and ethical decision-making, upholding the public interest, and reinforcing trust and confidence in the profession.
92. The next chapter examines architects’ professional status, which carries with it a responsibility and expectation to comply with legal and ethical obligations.