Regulatory fatigue: more regulations and fewer resources are squeezing financial compliance teams.

Author:English, Stacey
Position::Business & Finance

A GROWING awareness of the escalating and ever-changing demands of the business regulatory environment, coupled with a potential reduction in the resources available to meet compliance challenges, are the defining concerns of respondents to Thomson Reuters' seventh annual "Global Cost of Compliance 2016 Survey," which shows more compliance professionals now are looking to technology not only as a bigger challenge than ever before--with regulatory actions driving technological change as the remit of compliance broadens to cover cyber risks--but as RegTech is being assessed to help manage many aspects of compliance.

Surveyed compliance professionals continue to express regulatory fatigue and overload, with no perceived letup in the volume of regulatory change. Like 2015's survey results, 69% of firms expect regulators to publish even more information in the next year, with 26% expecting significantly more. Over one-third of the firms spend at least an entire day each week keeping track of steadily rising regulatory change.

On resource challenges and costs, 83% of global systemically important financial institutions (G-SIFIs) expect (skilled) senior compliance staff to cost more this year. Meanwhile, the scarcity of skilled compliance personnel is forcing two-thirds of all firms surveyed not only to do more with less, but to expect that senior compliance staff will cost more.

The candid "real world" feedback that is elicited confidentially from participants enables the findings to be a true finger on the pulse of global compliance functions. Comparing resources, challenges, and expectations against industry peers provides valuable insight and a sense of comfort for compliance practitioners and senior managers against a backdrop of rising personal liability and an evolving remit.

Key takeaways from the survey include:

* Focus on regulatory risk. Spurred largely by the greater regulatory demands placed upon the management of conduct risk, three-quarters of all firms surveyed expect the focus on managing regulatory risk to rise further in 2016. For G-SIFIs, the main influence driving their heightened focus is the impact of harsher regulatory penalties imposed upon them.

* Rising personal liability. In keeping with results from 2015,60% of all respondents--compared with 59% last year--expect the personal liability of compliance officers to increase, with 16% expecting a significant increase, while some 27% of G-SIFIs expect a significant increase...

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