HAS REGULATORY GROWTH MADE LIFE HARDER FOR COMPLIANCE?

The financial crisis of 2007-08 was an existential threat to global banking and finance. If that sounds grandiose, cast your mind back to those heady days of collapsing banks, government bailouts, mass job losses and global protest. If not oblivion, then banking was certainly undergoing a permanent and fundamental change. And one of the most potent and visible consequences of that change, in the years since, has been the extended parameters of regulation.

Consider the years that followed the 2008 crash. In 2013, the UK financial services regulator underwent a facelift, becoming the Financial Conduct Authority (FCA). It subsequently released its ‘principles for business’ (number one, ‘integrity’). These changes reflected a more profound shift in the culture of financial services in the UK, one that distanced itself from the negligent culture of pre-crash banking, where compliance was, in some places, little more than a tick-box exercise.

In 2010, the UK government passed the UK Bribery Act, a hugely significant statute that went further than any other anti-bribery legislation ever had, altering the perception of bribery from that of a ‘business expense’ to something that was unacceptable in every instance, save for putting one’s life at risk in a precarious situation.

Increased regulation has not been the preserve of the FCA, of course, with more expansive regulation and legislation implemented in France (Sapin II), the US (Dodd-Frank) and, on a wider level, the Basel III accords, emerging directly in response to crisis.

Are we suffering regulatory overload?

More than a decade on from the events of 2008, the most tangible indication of all these changes for those working in financial services has been the growth of regulation, the breadth of its measures, the widening of its scope and – arguably – the real threat of financial penalties for failing to comply (some critics claim the FCA has not been as vigorous in enforcement as anticipated – nevertheless, enforcement has been steady).

Oct-Dec 2021 Issue

International Compliance Association (ICA)