Surveys

Firms Not Confident To Comply In Time For MiFID II - Duff & Phelps Survey

Robbie Lawther, Reporter, 28 April 2017

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Professional services firm Duff & Phelps surveyed 183 senior financial services executives, compliance professionals and investment managers operating in the US, Europe and Asia.

As the MiFID II regulations are set to come into effect, only 36 per cent of firms are confident to be on track to comply with the regulation by 3 January 2018. This comes as costs for regulation expected to more than double by 2022, according to a survey by Duff & Phelps.

The professional services firm surveyed 183 senior financial services executives, compliance professionals and investment managers operating in the US, Europe and Asia. 

The survey found that 89 per cent of asset managers, brokers and banks believe regulations are increasing costs. It also found firms are typically spending 4 per cent of their total revenue on compliance, and this figure could rise to 10 per cent by 2022.

The new regulation has changed the way compliance departments allocate their budget, the firm's report. It said “they are now not just counting for the costs of implementing financial regulation, but for the costs of hiring a replacement compliance officer or interim staff; for regulatory penalties and remediation in cases of failure; and for their own personal liability if things go wrong”.

The report also found that firms have to reassess how to effectively allocate its resources to comply regulation as well as the increasing threat of cyber attacks.

“The way that financial services firms allocate compliance budgets is changing,” said Julian Korek, global head of compliance and regulatory consulting at Duff & Phelps. “The pendulum is clearly swinging away from spending simply on financial regulation and moving towards the fight against cybercrime. Skyrocketing costs mean that firms have had to decide which regulations to prioritise, meaning that some will miss the already extended MiFID II deadline. More guidance is needed from the regulator about how firms should allocate their time and money when complying with regulation, especially as the cost of Brexit, changes in US policy and cybercrime continue to emerge."

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