Compliance Officers Stretched to the Limit
Richard Steinberg 270004HRBG email@example.com | | Tags:  risk-management dodd-frank compliance openpages | 0 Comments | 2,267 Visits
As a compliance officer, you’re dealing with increased regulation and expectations, while related resources are subject to budgetary constraints. Yes, senior managements read the headlines and recognize the reputational and related risks associated with legal and regulatory compliance. But what I and others see are compliance functions having to do more, often without a commensurate increase in resources.
These observations are consistent with a recent Thomson Reuters survey of financial services companies’ compliance professionals. The survey shows that compliance officers are struggling to keep up with increasing demands of global regulation – where rapidly growing regulations and increasing responsibilities, together with limited resources and constrained budgets, are causing compliance personnel to reached a “saturation point.” A whopping 84 percent of respondents say they expect to deal with more information from regulators and exchanges this year, with almost half expecting the level to be "significantly higher." The increase is expected to come from such events as splitting of the U.K. Financial Services Authority, added regulatory power of the European Supervisory Authorities, expansion of new and existing U.S. regulatory agencies resulting from Dodd-Frank, and expanded enforcement of such regulations as the U.K. Bribery Act and the U.S. Foreign Account Tax Compliance Act.
The survey results show that compliance responsibilities and expectations are diverging from realistic capabilities. For instance, with a key objective being to coordinate with other company professionals involved with regulatory risk, over half of compliance professionals say they spend less than one hour weekly with internal audit colleagues, and one third spend less than one hour per week with legal and risk professionals. And while 70 percent of respondents expect the cost of senior compliance staff to increase this year, only 11 percent of companies expect a significant increase in budgets.
Also interesting in the statement that: “While keeping executive management informed of regulatory issues is a key part of the compliance role, more than a quarter of respondents say they spend less than one hour a week reporting to their boards. In the U.S., more than half of the companies surveyed spend less than one hour a week reporting to their boards. This raises concerns about whether executive management is being kept sufficiently informed on compliance issues.” Well, it’s not entirely clear from this as to the extent of interaction between compliance officers and senior management – one hour a week with the board may be just fine, as long as there’s significant interaction directly with executive management.
In any event, what we see is compliance departments already working at a fast pace with high efficiency, but they face risks going forward if responsibilities and resources aren’t recalibrated to be in sync.