Fireside chat with the authors of Cost of Compliance 2019: 10 years of regulatory change



this year marks the tenth anniversary of the Thompson Reuters of regulatory intelligence report on the cost of compliance which looks at the challenges financial services firms expect to face in the year ahead I'm Stacey English head of rachet or intelligence and I'm joined by our senior expert Col fastest Anna Hammond almost 900 firms from around the world took part in the research this year which provides really credible insight and I must thank the thousands of senior compliance practitioners who so openly shared their views with us over the last 10 years the findings helps firms with planning and the real value for compliance is being able to benchmark their own approach resources and expectations against peers to determine whether they are in line with a wider industry when Suzanna and I started to research just after the financial crisis both the industry and the role of compliance were very different to where we are now we were also entering a decade of massive regulatory change so the report has evolved in parallel with a changed financial services and the role of compliance and that role of compliance has developed out of all recognition in the last 10 years to the business prevention unit the policeman the know men whatever that the epithet was back then now compliance is a fundamental part of the business process and you have to invest and understand and work with your risk and compliance functions if you want success into the even in the short and medium term but one of the things that we've certainly seen develop over the last 10 years is how much people have been willing to share with us as part of their response we see now in the free text questions we ask an almost cathartic outpouring of the challenges and the issues so to echo Stacy thank you so much for all of that information and we try and wrap that up and feed it back to people so they can then use it for benchmarking or whatever so in those 10 years or over those 10 years what has been the biggest trend do you think well I think over the last decade we've seen a significant change in the compliance function itself specifically I think we see compliance it's now a much greater role in in this itself is taking much more seriously and the sorts of challenges we'd hear about where compliance couldn't get seen senior management time or couldn't get budget largely confined to the past and I think that's driven you know as a result of a lot of enforcement actions we've seen over the last decade and you know how important that compliance is to the fan we've also witnessed the impact of technology and that's had a real change on the role of compliance it's impacting you know how active activities are undertaken but also the remit is having to expand to allow for the risks about buying new technology and specifically things like data security issues or cyber attacks which can actually have an adverse impact on customers we've we see something stay constant so the volume of pace of regulatory change that's been singled out year-on-year as the biggest single challenge and that's really something we've seen at Thomson Reuters rec intelligence where we're now tracking over a thousand regulators 220 alerts every single day which awful lot of information for firms to keep on top of that and finally in terms of personal liability there's been a source steady rise in compliance expecting to have greater compliant liability and what that means is actually it's getting harder to fill some of those senior roles with you know qualified and experienced staff yes exactly and you know what we're seeing now for this year there's 900 respondents that you mentioned earlier is the focus again on regulatory change and the sheer regulatory burden associated with always changing I mean if your entire IT budget is basically absorbed by having to implement regulatory change that leaves precious little else around the edges for business development sorting out your IT infrastructure whatever it happens to be so there is definitely a burden there also this year people have been telling us that there is a big focus on financial crime in the biggest sense so Prevention of Money Laundering counter terrorist financing sanctions all of that is a really big focus and then last but definitely definitely not least is culture and conduct risk I mean so what that is is talking about things that aren't in the black and white of the rulebook that are such a central regulatory focus regulatory expectation you can hardly read a speech from a regulator without culture or how a business is operating coming up in that so given all of the changes we've seen in the last ten years uniquely this year we asked the question what do you see is the biggest change in the coming 10 years so where did we get to with the biggest change for the next ten years well we asked an open question about this and we have a lot of deep responses and there was a lot of consensus there actually it's technology and health is going to be the biggest change of the next decade and the overriding expectation is that technology is going to mean that a lot of compliance activities are actually automated on the back of that that changes the role and the skills that required in compliance and we're expecting to see that practitioners are going to need to be experts in things like rec tech FinTech data analytics so they can actually advise their business so as well as being expensive the regulations they're going to need to have that wider skill set that bridging technology angle we're also I'm hearing the compliance officer expecting to have a much greater role in the business they're expecting to be consulted early on so they're involved in planning and strategy right through to product development and delivery rather than as has happened in the past just being brought in when things go wrong yeah so a lot of change going on a lot of challenges that we're hearing about what do you think one thing compliance to be focused on for me it would be their skill sets they are not senior compliance people in particular are not going to be able to deal with the future without making sure their skill sets are completely up to date and we've touched on that the need for the automation and the technology so as a senior compliance officer are you able to assess a FinTech product do you know what reg tech is could it have do you know how it could impact your firm equally the more interesting shall we say products Bitcoin distributed legatee ledger technology blockchain do you know how those work do you know how they could impact your business so my one piece of advice is skillsets invest in your skillsets invest in the skillsets for your team just invest in your skills and that I think will equip you the very best it possibly can to take you into the future very sound advice and in terms of the report itself please download it from Thompson Reuters regulatory intelligence and we'll have the link out to everyone as soon as possible thank you

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