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Compliance Teams Continue To Struggle, Says Thomson Reuters Annual Survey



2013-02-27 10:09:27 -


Increased regulatory scrutiny, maturing regulatory frameworks and expectations
around risk framework delivery are piling pressure on constrained compliance
resources

LONDON, 27 March 2013 - Compliance professionals globally continue to struggle
under the weight of global regulation and need the support of the Board and
supervisory authorities within their firms to deliver effective and stable risk
management, according to a new survey by Thomson Reuters. Already stretched
compliance functions will need to find ways to build and maintain relationships
with regulators as well as help their Boards deliver an increasingly risk-
focused agenda.

The annual Thomson Reuters survey covered more than 800 compliance practitioners
from financial services firms including banks, brokers, insurers and asset
managers across 62 countries covering Africa, the Americas, Asia, Australasia,
Europe and the Middle East. It builds on a survey of similar respondents
conducted in early 2012 so presents year-on-year trends and developments. Key
findings from the latest report include:

* 81 percent of compliance professionals expect an increase in the volume of
regulatory information in 2013 with almost half expecting this increase to
be significant

* In the UK, a greater proportion of compliance professionals than any other
region globally (31 percent), spend more than 10 hours per week tracking and
analyzing regulatory developments. This figure has risen from 25 percent
last year

* 65 percent 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 percent 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

"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, Governance, Risk & Compliance, 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."


Continued increase in regulatory information

Although 2013 will see the maturity of significant regulatory reform programmes
globally it is clear that while many major debates on regulatory structure may
have finished, the detail that will be needed to put flesh on the bones of the
new structures is still awaited. This year's survey found that the vast majority
of respondents (81 percent) expected volumes of regulatory information to
increase slightly or significantly this year, compared with last year.

Respondents' views about the increasing volumes of regulatory material being
published in 2013 chimed with Thomson Reuters own experience of tracking
regulatory activity; although analysis of internal volumes of tracked material
is dissimilar to respondents' experiences of change tracking; the trend is the
same, and the volume of alerts tracked within Compliance Complete, Thomson
Reuters regulatory news, analysis and tracking solution, to the end of 2012 was
35 percent higher than the previous year.

Strained compliance resources

As the amount of regulatory information that firms have to handle continues to
grow compliance teams are showing signs that resource constraints are limiting
their ability to perform vital compliance functions and allocate compliance
resources effectively. This is especially acute in the UK where nearly 31
percent of respondents said that they would be spending more than 10 hours per
week tracking and analysing regulatory developments. This figure was
significantly higher than any other region and is likely to be a reflection of
the move to the new regulatory structure, regulators' increased focus on
enforcement action and proposals around the ring-fencing of banking assets.

It is likely that in the largest, most complex firms some compliance staff may
find most of their working week taken up with redrafting policies and procedures
to reflect developing regulatory requirements however Thomson Reuters survey
found that 40 percent of firms spent at least half a working day or more
completing this task. While important, the role of compliance should be to
advise and assist the business, and in the current environment where compliance
resource is stretched, the business itself should be encouraged to own its
policies and procedures.

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 and understand that detailed
board reporting forms are an essential component of effective corporate
governance.

Plugging budget gaps

In last year's survey, only 11 percent of companies expected a significant
increase in their budget for compliance. This year, the figure has risen to 17
percent and overall 67 percent of respondents expected their budgets to rise
slightly or significantly.  This may indicate that those who make budgetary
decisions are increasingly risk aware and appreciate the need for a well-
resourced compliance function to mitigate the myriad risks which firms may face
in the coming year.

While this overall message is positive, this year, still a third of respondents
expected their compliance budgets to be the same or less at the end of 2013.
When contrasted with 81 percent 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.


A detailed report on the survey's findings can be found at:
accelus.thomsonreuters.com/content/2013-cost-compliance-survey-s ..
report


Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for
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and media markets, powered by the world's most trusted news organization. With
headquarters in New York and major operations in London and Eagan, Minnesota,
Thomson Reuters employs approximately 60,000 people and operates in over 100
countries. Thomson Reuters shares are listed on the Toronto and New York Stock
Exchanges.  For more information, go to: thomsonreuters.com


CONTACTS

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+44 20 7542 0561
+44 7825282483
alan.duerden@thomsonreuters.com




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