The research, titled ‘Regulatory strategy in Financial Services: how firms are approaching data and compliance’, found that just one third (33%) of financial services organisations say they are prepared for key upcoming regulations such as MiFID II and the General Data Protection Regulation (GDPR). The survey also revealed that more than half of respondents (53%) say that the level of regulatory scrutiny has increased in the last year. In comparison, just 9% believe it has fallen during that period.
DST surveyed 100 financial services professionals to better understand the key issues firms are facing with regulatory compliance. The survey looked to uncover how prepared organisations were for key regulations as well as the barriers to achieving compliance progress.
When looking at resources, the research found that nearly half (49%) have increased the number of compliance professionals within their firms in the last five years, with 41% expecting an increase again this year to cope with regulatory demands. Again, almost half (49%) say they will spend more on compliance this year than last with just 9% saying spending will fall. Worryingly, a third (35%) of those surveyed are not confident they have the necessary technology in place to comply with regulations such as MiFID II and GDPR.
The survey also asked professionals about their biggest compliance worry and found that almost a quarter (24%) said it was the rise in personal responsibility, ahead of being behind schedule for complying with key regulations (19%), a lack of understanding of the regulator’s requirements (14%) or lack of compliance skills (12%).
Ian Betley, Vice President at DST said: There still exists a real challenge with financial services companies embracing regulatory compliance and it is worrying that the political uncertainty has hampered firms’ ability to press on with preparing for key regulations.
The UK’s withdrawal from the EU does create substantial uncertainty however, it is unwise for financial services firms to use this as an excuse to delay tackling the challenges major EU regulations present. GDPR and MiFID II will all be in force well before the UK leaves the EU and it is possible that if UK financial services organisations want access to EU markets, some form of equivalence in the regulatory regimes will be likely.
Increasing regulatory scrutiny has been the defining trend in financial services firms over the last decade with costs of compliance soaring. There is little sign of a let-up, with a range of additional and substantial regulatory requirements coming in over the next two years that companies need to be prepared for.
To tackle the regulatory challenges, responsibility for compliance must rest far more widely than in any isolated function alone and should be embedded throughout the organization.”
The white paper ’Regulatory Strategy in Financial Services: How firms are approaching data and compliance’ is available here
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