Finance sector underestimating the regulatory challenge

Financial services firms are still underestimating the compliance challenge facing the sector, according to research.

Organisations face a wide range of compliance issues, with numerous new regulations being imposed by the Financial Services Authority (FSA) and EU regulators, plus the need for compliance with US rules for multi-national firms.

And according to the survey by financial web site Finextra, the number one challenge is anti-money laundering, which 75 per cent of firms are working on, while corporate governance (61 per cent), system security (63 per cent) and improved customer identification (67 per cent) are the other primary concerns.

Bank of Ireland IS director Peter Stafford says compliance with legal and regulatory frameworks is one of biggest challenges facing IT departments in the financial services industry.

'Technology has a massive role to play, and we have made a number of investments to help make compliance easier and less expensive,' he said.

'For example, we have deployed imaging and tools that facilitate the extraction of information from systems, and taken steps to ensure we have access to scalable management information databases.'

In October, mortgage providers will become regulated by the FSA, while earlier this year extensions to anti-money laundering rules meant that all firms dealing with large volumes of cash had to comply with legislation.

Nearly 80 per cent of companies polled in the financial services sector say technology will play an important role in achieving regulatory compliance, but nearly 60 per cent say they will need to implement new systems.

Some per cent of respondents admitted their infrastructure is either doing a poor job or needs improvement, in order to ensure compliance.

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