Is MiFID II another regulatory compliance scheme to flush capital down the toilet?
Prips, is due at the end of 2016, the Market Abuse Directive and regulation is round the corner, the date for Anti-Money Laundering Directive is June 2017 to be compliant, Senior Managers' Regime in 2018, so is Data Privacy and Security (GDPR) and the outcome of the Financial Advice Market Review is entirely unknown. So much to do and so little time to do it properly.
All financial institutions are spending so many resources and money on coping with regulatory change, that there seems to be a real budget and financial conflict to be able to allocate resources to invest in technology. This is a major problem in the long run.
Besides IT and automation, the other major issues and challenges are how to integrate the processes, recruit, train and retain staff.
Problems to overcome
In spite of the regulatory overreach financial institutions are obliged to free up the energies required to work in close collaboration with all stakeholders and counterparties to develop a compliance manifesto outlining each organizational component, its best execution, costs and charges, transaction reporting, third-party dependencies, constrained timeframes, technology and systems changes that are required. In other words the whole ball of wax.
Regulation, technology, clients and staff.
In addition to the above, all companies must have a plan on how to ensure regulatory control and cope with all pieces of the regulatory legislation by engaging customers and the use of technology. Another aspect is the communications with stakeholders, clients and market in spite of the uncertainty of the regulatory changes. With a communication plan in place, it is possible to interact in different ways should the need arise.
Biggest area of compliance concern
So much to do and so little time to do it that seems to be a primary concern to ensure that technology and systems changes are done properly and to give stakeholders the regulatory knowledge to recruit and train staff to execute the required shifts in the compliance landscape.
At a time when profits are down, and budgets are being cut the compliance risk professional is faced with ever increasing regulatory demands to comply. There are real resource implications, therefore, essential that all stakeholders join forces so that all processes, transactions, and controls are screened and monitored. Forward integration can help achieve compliance competence without diluting and weakening the compliance risk function.
There are various types of integration activities to that are needed to facilitate lean and efficient business. There is the lateral or vertical integration of processes or applications. Sometimes two companies will have a horizontal integration to join and try and make better profits as a pair. (On a macro level of vertical integration an oligopoly is created)
All integration that involves cooperation
Utilising different organisation and structural approaches to coordinate all processes and transactions, the group's operation often uses horizontal integration that requires cooperation with entities that function on a similar level.
However the level of fiscal and regulatory sanction for Governance, Risk Management, Compliance or IT security (GRC) breaches continues to increase substantially. The oversight regulators and law enforcement have targeted both corporates and individuals, including owners and senior managers to make them accountable and responsible for their actions.
For an earlier article on Forward Process Integration see; http://www.copenhagencompliance.com/news/issueXXI/Forward_Process_integration.php
