Financial services firms over spend to meet new compliance laws

Almost half of financial institutions (49 per cent) are exceeding the expected cost of implementing compliance solutions, according to a study by PMP Research.

The research shows 13 per cent of financial services firms have reacted to a wave of new compliance by considerably exceeding their budget.

The report shows an effective technology strategy is vital component to a solution for over spending.

While 36 per cent of organisations have met their targets, none have come in under budget.

The report shows 92 per cent of companies prefer to use in-house expertise as the main route to develop ‘best practice’ for governance and compliance. And 72 per cent source information from industry bodies, while only 62 per cent approach external consultants.

The level of investment varies considerably, with 18 per cent of companies spending less than £500,000, 31 per cent spending £1m and £10m and 14 per cent £10 and £40m.

In the next two years companies still expect to spend considerable amounts on compliance with 41 per cent expecting an increase, 35 per cent maintaining their budget and 21 per cent anticipating a decrease.

While financial organisations have always had to cope with compliance and regulatory legislation the pace at which legislation is now introduced is proving challenging.

Sarbanes-Oxley and IFRS are the key drivers behind most recent development projects according to 80 per cent of respondents and these regulations were cited as having had the most impact on organisations.

‘Our research shows that over half of the companies surveyed were out of pocket when implementing a compliance and regulatory project due to bad planning,’ said Brian Male, vice president EMEA, Lawson Software who commissioned PMP research to carry out the study.

The research was conducted in the spring of this year and includes the opin ions of senior managers from over 50 large financial organisations.

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Further reading:

Firms given Sox breathing space