Financial services industry executives on both sides of the Atlantic agree that new regulatory reform measures designed to increase long-term stability won’t forestall future risks, according to a new survey from Protiviti (www.protiviti.com), a global business consulting and internal audit firm. Ninety-seven percent of respondents say new measures won’t prevent another financial crisis, though nearly half believe they will moderate the effects of one. Most respondents also reported that actions of the regulators will be more important than changes in laws in determining how financial services companies operate.
The Protiviti Financial Services Regulatory Reform Survey (www.protiviti.com/regulatoryreformsurvey) examines the impact of regulatory reform on financial services organizations in the United States and the United Kingdom through insights from more than 100 industry leaders, including chief executive officers, chief financial officers, chief operating officers, heads of compliance and other executives.
The Protiviti survey reveals numerous areas of concern within the U.S. and U.K. financial services industries. For example, 39 percent of all respondents said regulatory reform will have a negative impact on their organizations’ recovery from the global financial crisis. The response was higher among U.S. respondents, with 54 percent anticipating a negative impact, compared to 28 percent of U.K. respondents. Just 9 percent of all survey participants believe regulatory reform will have a positive effect on recovery efforts, while 52 percent reported there will be no effects.
“While certain aspects of current reform packages are intended to create more proactive regulatory regimes, doubt lingers about the ability to identify developing crises in the future and respond to them in a timely manner,” said Carol Beaumier, an executive vice president of Protiviti and the firm’s global financial services industry and regulatory leader. “There are also significant concerns about the impact of reform on operations and long-term profitability in the wake of the financial crisis. It will be interesting to observe how – and to what extent – these perceptions and realities change as regulatory reform progresses.”
Beaumier added that U.S. regulators are still in the process of proposing and finalizing hundreds of new regulations as required by the Dodd-Frank Act, which passed into law last summer.
Other topics addressed in Protiviti’s study include international coordination of regulatory reform; the effect of regulatory reform on company culture; and shifting of business operations to jurisdictions with more inviting regulatory regimes.
“Protiviti believes those organizations that are proactive during the early stages of regulatory reform in considering how regulatory changes are likely to affect their business will come out ahead of their competitors,” said Andy Clinton, a managing director with Protiviti and member of its global financial services leadership team as well as head of the firm’s UK operation. “In these uncertain times, companies with strong risk management and an enterprise-wide view of compliance will have an advantage because they will be better able to adapt and manage changing regulations, causing less disruption to their business operations.”
Protiviti conducted its Financial Services Regulatory Reform study in September 2010. Financial services industry executives and management-level professionals from the United Kingdom and the United States were invited to complete an online questionnaire designed to assess the effects and long-term impact of regulatory reform initiatives in their home countries and globally. More than two-thirds of respondents represent organizations with annual revenues in excess of US$1 billion. This is the first in a series of surveys Protiviti plans to conduct that will focus on various financial reform issues.
A complimentary copy of the survey is available at: www.protiviti.com/regulatoryreformsurvey.
Protiviti is a global business consulting and internal audit firm composed of experts specializing in risk, advisory and transaction services. The firm helps solve problems in finance and transactions, operations, technology, litigation, governance, risk, and compliance. Protiviti’s highly trained, results-oriented professionals provide a unique perspective on a wide range of critical business issues for clients in the Americas, Asia-Pacific, Europe and the Middle East.
Protiviti has 60 locations worldwide and is a wholly owned subsidiary of Robert Half International Inc. (NYSE: RHI). Founded in 1948, Robert Half International is a member of the S&P 500 index.
Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services.
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