The UK’s pending departure from the EU comes as financial services organizations have reached a saturation point in funding their compliance mandates, according to market data and trading platform vendor Thomson Reuters.
“Over the last few years, there’s a sense that firms were devoting more and more resources like money, IT spend, energy, and effort to risk and compliance functions,” said Susannah Hammond, a senior regulatory specialist at Thomson Reuters and co-author of a recently published whitepaper. “This time around, we are getting that there is a natural limiting point for continued investments. Not that compliance is necessarily perceived as any less important.”
Although firms continue to increase their investments into compliance, the growth of investments has reached a plateau, she added.
Hammond attributed this new level of regulatory fatigue to an ever-increasing level of reporting and the increasing dearth of seasoned compliance officers.
Susannah Hammond,
Thomson Reuters
“The sheer volume of regulatory change and, of course, the uncertainty of the details of the exit mechanism for the UK’s departure from Europe just means more for everyone in financial services and compliance organization in particular,” she said.
The expanding roles of compliance organizations within their companies also compound funding issues. “Cyber resilience is no longer the preserve of the IT function; the potential detriment to customers and increasing regulatory expectations means that it is also part of the compliance function’s remit,” the authors wrote.
Additional technological advancements, such as automated trading systems and financial product investment and distribution platforms as well as new technologies like robo-advisor, distributed-ledger platforms, and peer-to-peer lending platforms, have only added to compliance professionals’ workload.
How firms address the changes in funding varies on a firm-by-firm basis.
Hammond has seen some organizations adapt to funding constraints by outsourcing some compliance functions as well as automating some processes using regulatory technology, or ‘Reg Tech’. “This can free up compliance functionality for more value-add pieces of work while making sure that reporting and monitoring happen as smoothly as possible,” said Hammond.
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