The raft of regulatory changes brought in by the Financial Services Authority
(FSA), the EU, and from the US through the Sarbanes Oxley Act in the last five
years have brought about few noticeable benefits, a survey by Ernst & Young
The release of E&Y’s: Challenges Costs and Future
Expectations report showed that financial services companies remained
unconvinced of the benefits of the new rules.
Furthermore, the cost of implementing the regulation is not cheap.
Ernst & Young estimate that as much as 5% of profit before tax of the 30
leading financial institutions surveyed in the study is spent on risk management
which translates for the largest companies to well in excess of £100m each per
Dr Stephen Christie, head of the financial services risk & regulatory
practice, at E&Y said: ‘The operating models currently in place for risk and
compliance across many organizations, evolved in response to twentieth century
regulations. The pace and complexity of change in the twenty-first century is
beginning to highlight significant shortcomings in these models.’
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