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May 12, 2008

Compliance costs set to rise

by Gill Montia

Story link: Compliance costs set to rise

A new report from professional services firm, Deloitte, is warning that the cost of regulation in the financial services sector is set to rise steeply in the years ahead.

The world’s 100 leading financial institutions have already experienced a 30% hike in compliance costs over the past three years, with the total bill increasing to around £28 billion in 2007.

Putting aside new forms of governance that will emerge from the credit crisis, Deloitte is forecasting that these same businesses could be paying £50 billion in compliance related expenses by 2010.

The “In Control?” report is recommending that companies put their governance and control systems at the top of the corporate agenda and warns that these systems are now central to the individual success or failure of senior executives.

According to Deloitte, learning from the credit crisis implies that some major global financial institutions had failed to link risk and control factors together, with disastrous results for some.

The firm is hopeful that financial institutions will begin to see that resources directed at regulation can transform compliance matters into a competitive advantage, leaving behind their image as an unavoidable burden.

 

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