Compliance professionals are increasingly keen to innovate in face of a rising tide of regulation but lack the necessary resources to do so, according to new research commissioned by Pinsent Masons.
In a survey of 100 London-based senior compliance professionals, over half said that they were not budgeting for innovation and technology in respect of compliance solutions. 92% said that they rely on compliance processes that are either partially or entirely manually administered.
Regulatory compliance experts at Pinsent Masons say that the results are striking given the increasing focus on regulatory matters at Board level, and the increasing level of spend on compliance. The firm highlights that:
- 7 in 10 of those polled said they expected Board interest in compliance to increase over the next 12 months
- 86% expect their regulatory spend to increase over the next five years. More than 1 in 10 respondents expect budget increases of as much as 40%
- A fifth of those polled admitted that their compliance processes are not consistent across their business.
Despite the increasing cost and risks associated with inconsistent application of compliance processes, few have the resources to fully embrace the potential of technology to revolutionise compliance practices. While a third of those surveyed indicated a desire to innovate to meet the compliance challenge, 53% of respondents reported having no budget allocation to do so.
Tom Stocker, a Partner and regulatory specialist at Pinsent Masons says,
“Businesses’ compliance budgets look set to keep on spiralling unless there is a change in mindset. The worry is that some sectors are already creaking under the weight of regulatory costs and that acts as a drag on profitability.”
“There is still a tendency in some quarters to think more regulation equates to a need for more bodies. It's only a matter of time before Finance Directors - and even shareholders - start to question that. Businesses need to think more creatively about ways to become more efficient and effective in their compliance processes if they are to keep costs down and drive performance standards up.”
“Greater innovation - from the use of automated services or integrated online platforms to more flexible advisory arrangements - are likely to be a focus of investment for many businesses of scale in future. However, there is a recognition that there will need to be partnership and collaboration with external parties to achieve that.”
In 2013 Pinsent Masons launched a joint venture with IT consultancy Campbell Nash to develop Cerico , which advises on the design and build of online compliance solutions to complex regulatory needs.
The full Pinsent Masons report, which was developed in conjunction with Legal Week Intelligence, can be downloaded here.