This article was republished with permission by the copyright holder, Thomson Reuters. It first appeared in the Thomson Reuters Regulatory Intelligence subscription service for compliance and risk professionals.
Written by Richard Satran for Thomson Reuters Regulatory Intelligence – first published on April 19, 2017.
A wave of financial services deregulation promised by the administration of U.S. President Donald Trump has so far had little impact on decision making by top risk and compliance officers, a survey at a major industry conference last month found.
Political issues are “not yet weighing heavily on compliance decisions” for 85.2 percent of those polled by financial services communications firm IPC in its survey taken in March, entitled “The C-Suite and Compliance.” However, 9.8 percent viewed the potential regulatory changes as important enough to postpone key decisions for later in the year. Only 4.8 percent saw them significantly affecting decisions already made.
The response came from top level risk and compliance executives, with 81 percent holding C-level positions as chief compliance officers or chief legal counsels as well as chief risk, data, information and operations officers, and chief executive officers. The survey was compiled at the 2017 Securities Industry and Financial Markets Association Compliance and Legal Society Annual Conference on March 19-20, in San Diego.
The Trump administration took office in January with a flurry of activity aimed at peeling back the Dodd-Frank legislation of the prior administration. But delays and legal obstacles have so far stalled most of the initiatives.
Nearly seven years after the passage of Dodd-Frank, which resulted in an unprecedented roll out of regulations for financial firms, compliance executives say they are “supporting business goals” and continuing to implement regulatory requirements.
“Global financial services firms’ regional politics tend not to play as a large a role as one might expect,” explained Michael Speranza, IPC senior vice president, corporate strategy. What’s more, he said, “generally, the region having the most stringent regulatory requirements will guide how you do business globally.”
Speranza said that U.S. firms that fail to keep up with global requirements under the European Union’s MiFID II record-keeping obligations would ‘place a U.S. firm at a disadvantage ” if regulatory questions arise. “Trying to defend yourself without this data can be a tricky proposition,” he said. “Non-compliance can lead to millions of dollars in fines or reputational damage for companies not wise enough to take it seriously.”
The potential demands of regulators outside the United States are keeping firms wary of easing compliance, he said. It explains why compliance culture and conduct concerns remain the top issue for the group made up largely of chief compliance, risk, data, information and legal officers, with 89.3 percent calling a top concern. Understanding rules and regulations remained a high priority (87.3 percent), along with implementing new regulations (86.4 percent).
Nearly all of the firms increased investment in risk and compliance programs over the past year. Most of the firms (80 pecent) said spending had gone up 20 percent, another 5.9 percent spent 10 percent-to-20-percent more. Just 6.0 percent stayed at the same level.