UK firms 'face e-disclosure time bomb'

27 May 2009

Companies in the UK are facing a "time bomb" of legal, compliance and reputational risk thanks to an upsurge in e-disclosure requests, a new report has concluded.

Research by Recommind cited by OpRisk & Compliance magazine shows 41 per cent of UK firms have experienced a rise in requests for e-disclosure - but two-thirds currently allocate less than five per cent of their IT budgets to handling such applications.

E-disclosure involves identifying, collecting and retaining electronically-stored data for internal and regulatory investigations and legal actions, the publication noted.

Recommind's report indicates that the biggest factor behind the increase in e-disclosure requests is suspected fraud and financial crime, followed by the proliferation of electronic communication, the global recession and the influence of US regulations on the UK.

The firm's European director, Simon Price, said: "The problem is that e-disclosure is still seen as a US problem and for many UK companies that is all the excuse they need to sweep it under the table."

Mr Price warned that if requests for electronic information continue to rise, UK firms could soon find themselves subject to the "same level of scrutiny" as their US counterparts.

Recommind was founded in 2000.

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