2020 and 2021 have been eventful years, dominated by the COVID-19 pandemic and political and regulatory changes across the globe. In their Cost of Compliance 2021 survey Thomson Reuters researchers asked over 720 global financial services professionals their thoughts on the state of compliance in today’s world. The results highlight the challenges and changes that compliance practitioners in the financial services industry expect to face in the year ahead.
Budgets are holding tight
36% of respondents predicted that their compliance budgets will remain the same, 42% predicted a slight increase, and only 10% predicted a significant increase. Respondents indicated that their compliance teams will likely stay the same size as well.
Doing more with less has been a constant theme for compliance professionals. Technology can help drive efficiency and effectiveness by automating manual tasks and increasing accuracy. During the webinar Compliance Budgeting: Reducing Risk by Doing More With Less, Keith Pyke, Solution Sales Director at MyComplianceOffice, noted “it’s important to remember that risks and challenges are different for each firm. Make sure your compliance program is fit for purpose by tailoring the technology to the specific needs of your firm and allocating resources accordingly.”
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Working from home fuels conduct risk
The ramifications of working from home remain a compliance concern. Respondents identified effectively managing and motivating remote workers as a large area of culture and conduct risk concern facing firms in 2021. A Risk and CFCC Chief Compliance Officer from the United Kingdom shared “Different conduct risks arising from remote working especially in sales and trading.”
62% of respondents expect the cost of time and resource devoted to conduct risk issues to increase in 2021. The researchers note that a portion of that increase is likely due to the challenges of building a strong risk culture when employees are working remote instead of an in-person office environment.
Join MCO’s Kelly-Ann McHugh and Thomson Reuters Regulatory Intelligence Expert Helen H. Chan for the on-demand webinar Mitigating Anti-Bribery, Corruption & Corporate Gift-Giving Risk to explore key trends in the Asia-Pacific region.
During a recent speech to the Council of Institutional Investors, SEC Commissioner Caroline Crenshaw noted “A strong working culture supported by an effective approach to conduct risk will give firms and their employees the best possible chance of remaining compliant, not only in day-to-day business but also when the unexpected happens and changes are needed.” Without the right technology, conduct risk blind spots can exist throughout the organization, especially when the workforce is dispersed. Learn how MCO’s fully integrated Conduct Risk solution enables organizations to seamlessly monitor, identify and remedy conflicts of interest and code of conduct issues.
Regulators as external drivers of change
The survey researchers note “It is important to acknowledge one external driver of change. The ability of firms and compliance officers to change culture, governance and processes is, to varying degrees, predicated on the changes being made by regulators.”
With 78% expecting regulatory information to increase in the coming year, the top compliance challenge expected by boards and compliance officers was the increasing volume of regulatory change. Increased regulatory alerts and activity reflect the significant social, political and economic developments that were seen across the globe in 2020. Political changes including a new administration in the U.S and the aftermath of Brexit have compliance officers anticipating more stringent regulatory demands and expectations in 2021.
There has been a recent proliferation of accountability regimes as regulators seek to increase the accountability of senior managers and drive better risk aware behavior. The Senior Managers and Certification Regime in the UK, the Banking Executive & Accountability Regime in Australia, the Guidelines on Individual Accountability in Singapore, and the Manager-In-Charge Regime in Hong Kong are putting regulatory focus on individual responsibility. MCO's Role Monitoring and Assurance solution can help firms of all sizes track functions, responsibilities and activities in compliance with individual accountability regimes.
Watch MCO’s on-demand webinar Preparing for Singapore's Rules on Senior Manager Accountability in Financial Institutions featuring Nathan Lynch, Asia Pacific Manager, Thomson Reuters Regulatory Intelligence and Niall Coburn, Senior Regulatory Intelligence Expert, Thomson Reuters.
Technology as an internal driver for change
The survey authors noted a strong focus on technology and digital transformation as financial services firms responded to remote work and other implications of the pandemic. Technology also helps employees to excel at their roles and ensure the good customer outcomes required by regulations.
The right technology platform helps firms focus on business objectives, creates more value, and cements compliance as a strategic department within the organization. Read the whitepaper Getting IT Done - Optimize the Software Selection Process for the Best Outcome for guidance on how to select the compliance technology that best meets your firms needs.
Are you on track to meet your 2021 compliance goals?
Although 2020 and 2021 have presented challenges, compliance teams can also use the changes that have taken place as an opportunity to develop strategies for the future. “For example, they can initiate cultural changes that focus more on individual behavior or define how future automation can be used to evidence compliance within the firm.”
If your 2021 goals include employee compliance automation or better identification of conflicts of interest, MCO can help. MCO’s affordable MyComplianceOffice platform can provide you with a comprehensive compliance solution or cover a specific area. Contact us today for a demo.