Compliance costs still on the rise, SteelEye report says
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Compliance costs still on the rise, SteelEye report says 13 April 2023UK Reporter: Lucy Carter
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Surveillance solution SteelEye has found that 76 per cent of financial services firms have increased compliance expenditure over the past 12 months.
The Annual Compliance Health Check Report, conducted in February 2023, included more than 300 senior compliance and risk professionals from the US, UK and Western Europe.
Enhanced regulatory scrutiny and the issuance of penalties is the primary driving force behind this increase, the report says, something only enhanced by recent bank failures. 38 per cent named investment in technology for the reduction of manual workloads as a cause of the price rise, with a further 32 per cent citing a growing volume of regulations.
Teams are having difficulty keeping up with requirements — despite 27 per cent of firms spending between 21 and 30 per cent of their total expenditure on compliance. However, this is not being spent on staff. Just 21 per cent selected hiring and attrition as a reason for increased costs.
Instead, 73 per cent expect a rise in their firms’ regtech investments over the next year. This is a significant increase from 2022’s figure of 44 per cent, and marks the growing use of third-party solutions.
Investment in compliance is expected to continue its upward trajectory, the report says. With 62 per cent concerned about traders and portfolio managers taking more risks in a recession environment, firms will be monitoring activity more closely.
Looking to the year ahead, Matt Smith, CEO of SteelEye, comments: “The recent banking failures are going to add further pressure on compliance teams in the financial sector. While our report shows that 2022 saw huge progress in the sophistication of compliance technology, as a result of an increase in investment across the industry, this level of investment will need to continue into 2023 to meet the mounting regulatory pressure that is expected in the fallout of the recent events.”
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