What is regulatory compliance? A plain-English guide for 2026
What is regulatory compliance?
Regulatory compliance can be defined as the process of meeting the various laws, regulations, standards, and internal policies that govern how an organisation operates and are required by relevant external authorities.
For organisations in regulated industries including financial services, healthcare, pharmaceuticals, aviation, energy, utilities, charities and the public sector, regulatory compliance is a critical activity. It is both a legal and operational requirement and in practice compliance management is an area of focus.
Regulatory compliance covers everything from data protection laws like GDPR and the UK Data Protection Act, to sector-specific frameworks such as FCA regulations and NHS policies, through to ISO standards and health & safety legislation.
Meeting these requirements means having the right policies in place and all up to date, and also ensuring employees understand and follow them. But organisations must also be able to demonstrate this to a regulator when asked, sometimes at short notice.
That last point is where many organisations fall down. Just having policies in place is not enough. Regulators want evidence through documented proof that employees have read, understood, and acknowledged the policies that apply to them, and that those policies were current and reviewed on schedule when they were accessed by employees.
What is the difference between regulatory compliance and legal compliance?
These two terms are often used interchangeably and there is some overlap, but there is a meaningful distinction.
Why does regulatory compliance matter?
The consequences of non-compliance range from uncomfortable to catastrophic. The most common consequences include:
- Regulatory fines and penalties. GDPR fines can reach €20 million or 4% of global annual turnover. The FCA issued over £124 million in fines in 2025.
- Reputational damage. Compliance failures are increasingly public. Data breaches, unsafe practices, and governance failures attract press coverage and long-term brand damage.
- Operational disruption. A failed audit or regulatory investigation diverts senior management time, legal resource, and operational bandwidth.
- Personal liability. In financial services and healthcare particularly, senior leaders can face personal liability for compliance failures, resulting in fines, disqualification, and criminal prosecution.
- Unfortunate incidents: Regulatory compliance is there for a reason. Non-compliance in areas such as health & safety can lead to serious incidents with far-reaching consequences.
What are the main types of regulatory compliance?
GDPR, the UK Data Protection Act 2018, and sector-specific data handling requirements.
The Health and Safety at Work Act, Management of Health and Safety at Work Regulations, and sector-specific requirements.
FCA rules, Anti-Money Laundering (AML) regulations, the Senior Managers and Certification Regime (SMCR), and international equivalents.
CQC requirements, NHS policy frameworks, ISO 27001 for information security, and clinical governance standards.
ISO 27001, SOC 2, Cyber Essentials, and sector-specific security requirements.
Environmental regulations, Net Zero commitments, and ESG reporting requirements.
Equality Act, Working Time Regulations, minimum wage legislation, and flexible working obligations.
What is a compliance framework?
A compliance framework is a structured approach to identifying, managing, and evidencing compliance obligations. Most frameworks involve four core components:
- Policy governance — documented policies that reflect current regulatory requirements, with clear ownership, review cycles, and version control.
- Employee awareness and attestation — ensuring the right employees have read, understood, and acknowledged the policies that apply to their role and also are aware of subsequent changes.
- Monitoring and reporting — tracking compliance status in real time, identifying gaps, and maintaining an audit trail, with robust reporting that can be used as evidence for regulators.
- Continuous review — updating policies and processes as regulations change, rather than scrambling to catch up at audit time.
What is the difference between compliance and governance?
Governance is the broader framework by which an organisation is directed and controlled. Compliance is a subset of governance; specifically, the discipline of meeting external regulatory and legal requirements.
How is regulatory compliance managed in practice?
Compliance management involves a number of different elements:
Writing, reviewing, approving, updating and disseminating policies to reflect current regulatory requirements.
Ensuring that every employee who needs to read, acknowledge and understand a policy actually does so.
Assembling evidence that demonstrates compliance to regulators, auditors, and senior leadership.
Removing barriers to accessing and finding policies, for example directly inside Microsoft Teams or SharePoint using Microsoft 365 credentials.
Using automation where possible for reporting, audit trails, and notifications, so that regulatory compliance is scalable.
Frequently asked questions
What does regulatory compliance mean for a small business?
The same principles apply regardless of size, but the complexity and cost of compliance scales with the number of regulations you must meet.
Who is responsible for regulatory compliance in an organisation?
Typically, the Compliance Manager, Head of Risk, or Chief Compliance Officer, working alongside HR, Legal, and IT.
What happens if you fail a regulatory compliance audit?
Outcomes range from a requirement to produce a remediation plan, through to financial penalties, operational restrictions, and in serious cases revocation of the license that allows an organisation to operate.
How often should compliance policies be reviewed?
Most frameworks recommend at least an annual review for all policies, with more frequent reviews triggered by regulatory change, incidents, or organisational restructures.
Regulatory compliance is not a box-ticking exercise. It is the ongoing discipline of ensuring your organisation operates within the rules that govern it — and of being able to prove that to anyone who asks, at any time.
About the author
Dan Hawtrey
Dan Hawtrey
How policy management software can help
We think the best place to store your policies is inside SharePoint. Most companies already have SharePoint as part of their Microsoft 365 subscription. Using SharePoint means you have full control of your policies, and many best practices can be achieved right out of the box. However, there are gaps and certain best practices are hard to achieve.
To fill these gaps, and for best results we recommend using purpose-built policy management software for SharePoint and Microsoft 365.
We’ve developed a dedicated solution called Xoralia (pronounced Zor-ra-lee-a) that will ensure you have the best overall approach to policy management, supporting your users, policy owners and administrators.
We learned all about policy management from many years of building custom solutions for our clients on SharePoint. But we kept coming up against the same challenges, mostly caused by feature gaps in SharePoint. One day, a client asked us to build a policy management tool that filled these gaps. The trouble was, they didn’t have a lot of budget. But we had a good relationship with them and so we decided to collaborate on it provided we got to keep the code. Looking back, it was a pretty simple tool but over the years we have added more features and relaunched it. We’re now on version 3 and our original customer is still using it!
3 benefits you can expect from Xoralia
Make it easy to find policies
Centralised policy library with powerful search and filtering
Reduce administrative burden
Automations and notifications so that all policy tasks are carried out on time
Demonstrate compliance and best practice
Sophisticated tracking and dashboards to drive and measure compliance.
And lots more!
What our clients say
A great time saver and tool for document management
We have found Xoralia to be very beneficial to us as it has allowed us to focus on other area’s as Xoralia will take care of who has read the documents and notify them if they have not. A great time saver and tool for document management all together.
Tim Galer
IT Coordinator
Hughes
Ideal partner for our regulated environment
LifeArc operates in a strictly regulated sector where compliance and information security are critical. It is essential that LifeArc’s workforce have easy and effortless access to the latest up-to-date policies and procedures, which is the structure Xoralia gave us.
Adam Lythgoe
IT Manager
LifeArc
How to get started with Xoralia
Step 1: Explore or request a demo
Start a free trial for instant, hands-on access, or fill out our form to book a personalised demo at a time that suits you.
Step 2: Get a price proposal
If Xoralia looks right for your organisation, ask us for a tailored quote. We’ll outline any options and packages to fit your needs.
Step 3: Install and launch
Set up Xoralia in your environment with our support. We’ll provide onboarding, training, and full assistance to get your team up and running quickly.
Here's what you'll get
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Central policy library
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Search and filter tools
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Mandatory read policies with attestations
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Quizzes
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Notifications and alerts
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Employee dashboard
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Line manager dashboard
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Works on mobile, in Teams and SharePoint
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New policy creation workflows
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Policy update workflows
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Review and approval gates
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Policy version history
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Compliance dashboard
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Audit trail
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Full reporting
And last but not least:
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Professional implementation service and support
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Evergreen software – frequent updates and improvements
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Comes with our "it just works" support warranty – we’ll fix any bugs, often before you even notice
Ready to get started?
Connect with us to streamline your policy management and ensure effortless compliance.
Uniting excellence in integration and features for seamless policy management
As the newly appointed IT Manager at our company, I was tasked with implementing the Xoralia policy management tool, and the experience has been nothing short of impressive.
Rian Stuart
IT Manager
TwinStream
