Competing priorities for compliance departments today include tight budgets, challenges hiring and retaining skilled professionals, the continuing impact of COVID 19 and remote and hybrid work—all while maintaining a culture of compliance in the midst of everything else.
2021 saw continued diversification in the financial services industry. In addition to increased expectations from regulations across the globe, compliance must also deal with new areas like crypto and digital assets.
Thomson Reuters® Regulatory Intelligence surveyed almost 500 compliance professionals for their 13thannual survey on the Cost of Compliance. According to the survey, the top five challenges compliance professionals expect to face this year are:
- Volume and implementation of regulatory change
- Lack of budget and resources
- Availability of skilled resources
- Need for effective compliance monitoring
- Cyber resilience
These answers align with the concerns expressed in the 2021 Cost of Compliance survey. Read more about the Cost of Compliance in 2021.
According to the survey report, firms are facing a raft of culture and conduct risks. This year, respondents identified the need to balance competitive and compliance pressures, increasing regulatory requirements and the adequacy and availability of skilled resources as the main culture and conduct risks they face. Read more about the impact of culture on conduct risk in the white paper Conduct and Compliance: A Collective Approach to Ethics and Accountability.
In the APAC region, there was a tie for the single greatest challenge for compliance officers in the Asia-pacific region in 2022, with 36% of respondents noting a lack of skilled resources and 36% noting the speed and volume of regulatory change.
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Respondents were asked for the three key skills for an ideal compliance officer in 2022. The top three skills identified were subject matter expertise, attention to detail and communication skills. The ability to understand technology and interpersonal/stakeholder management skills rounded out the top five skills.
47% of respondents indicated that one of the reasons that they expect the cost of compliance increase is the need to recruit and maintain skilled and knowledgeable senior staff. Demand in the market for skilled professionals will allow employees to switch jobs for better titles and more compensation. A firm's approach to hybrid and remote work will also factor into employee satisfaction and employment decisions.
Senior manager accountability regimes and CCO liability concerns put pressure on compliance leaders that goes beyond budgetary concerns. The expectations on personal liability show that nearly half (45%) expect the liability of compliance officers will continue to grow in 2022. And this focus on personal liability can potentially make the career path an undesirable one for young employees.
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The top three practical changes identified by firms that affect the management of potential personal liability include:
- Enhanced regulatory training
- Deployment of technology
- Increased use of attestations
Communication with regulators will continue to be crucial for clarification, understanding and direction. Respondents expect to see that the need to stay connected with regulators will increase. The top three reasons for this expected increase include:
- More onerous regulatory and reporting requirements
- Increased information requests from regulators
- The need to understand changing regulatory expectations
See how MCO's Know Your Risk solution helps firms manage regulatory requirements and expectations
The future is driven by data and technology
“Financial services firms and their compliance functions are moving to a more automated environment and embracing digital transformation. A sign that regulatory technology may be coming into its own is the shift in the time spent tracking regulatory developments – a key area where regtech solutions can be deployed.”
—Thomson Reuters Cost of Compliance 2022
When asked what the ideal future of the compliance function would look like, a respondent from the United Kingdom described it as “Making good use of technology to automate processes and simple tasks to free up time for compliance teams to focus on more complex issues and forward planning.” The survey found that firms are using technology to streamline processes and spend less time manually reviewing regulatory information.
The report notes that firms are using RegTech applications for reasons including compliance monitoring and anti-money laundering (AML)/sanctions checking, and that compliance is using technology for for compliance monitoring, regulatory reporting and financial crime among other uses.
The report also reminds readers that technology and regulatory technology must be both mature and sophisticated in order to meet the needs of compliance functions.
Are you on track to meet your 2022 compliance goals?
If your 2022 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 with our experienced and tenured team.
Watch our on-demand webinar with Thomson Reuters expert Todd Ehert.