Red tape overload hurts business

Red tape overload hurts business

The poll of the Insider Business Club members shows that more than half felt red tape takes up too much of their resources

Senior UK finance staff fear that they are spending too much time on ensuring
compliance with corporate governance regulations, leaving little time to
increase shareholder value.

The poll of the Insider Business Club members, made up of finance directors
and senior members of their teams, showed that more than half felt red tape took
up too much of their resources. Just 40% thought the balance between compliance
and extracting shareholder value was right, while 7% didn’t spend enough time on
compliance.

The introduction of the Sarbanes-Oxley Act in the US was a major reason
behind this, according to governance experts.

‘I think the pendulum has swung too far towards regulation,’ said Tim
Copnell, director of corporate governance at KPMG, questioning whether companies
that have to document 250,000 controls are able to run their businesses
effectively.

Copnell suggested a period of calm may be needed so businesses can get back
to creating shareholder value. Some advised that the compliance burden can be
eased if they think about what they are doing, rather than panicking.

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