Compliance burden is still growing says Thomson Reuters survey

27 February 2013

Compliance professionals at financial institutions (FIs) around the world continue to struggle under the weight of increasing global regulations that demand better risk assessments, reporting and transparency, according to a new survey by Thomson Reuters that questioned more than 800 FI compliance practitioners at banks, brokers, insurers and asset managers across 62 countries covering Africa, the Americas, Asia, Australasia, Europe and the Middle East.

The 2013 Cost of Compliance Survey from Thomson Reuters builds on a survey of similar respondents conducted in early 2012 so presents year-on-year trends and developments. One of the principle findings of the report is that 81% of FI compliance professionals expect to see an increase in the volume of regulatory information this year, with almost half expecting this increase to be significant – this is not that surprising considering the raft of impending rules this year from centralised clearing of derivatives to the Retail Distribution Review (RDR) in the UK.

Other key findings of the report include:

• In the UK, a greater proportion of FI compliance professionals than in any other region globally (31%), spend more than 10 hours per week tracking and analysing regulatory developments. This figure has risen from 25% last year.
• 65% of companies thought that their liaison with regulators would increase in 2013.
• A third of respondents expected their compliance budgets to be the same or less at the end of 2013. When contrasted with 81% of compliance professionals who expected an increase in the volume of regulatory information this year, this may indicate that in around one third of firms budgetary constraints will lead to increased pressure on existing resources to do more, with less.

“The results of this year’s survey again show that compliance officers are finding the environments in which they operate increasingly challenging,” said Mark Schlageter, managing director, for governance, risk and compliance (GRC), at Thomson Reuters. “Shifting supervisory expectations, the volume and pace of regulatory change and the start of big implementation programmes for major complex legislation continue to pile diverse pressures on compliance functions. It is therefore essential that the effective management of risk and compliance has key contribution not only from a firm’s compliance function but also from its board and supervisory authorities.”

As the effective management of risk and compliance increasingly becomes the responsibility of the board and senior managers it is critical that boards are aware of the risks faced by the firms they govern, said Thomson Reuters in its report, pointing out that is “essential” detailed board reporting forms are a component of effective corporate governance procedures.

In last year’s survey, only 11% of companies expected a significant increase in their budget for compliance. In this year’s Thomson Reuters survey, the figure has risen to 17% and overall 67% of respondents expected their budgets to rise slightly or significantly, suggesting that at least some firms are getting the resources they need, if not all – remembering that a third of respondents expected their compliance budgets to be the same or less at the end of 2013.

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