Financial Industry Views Regulation Positively but Insufficient to Prevent the Next Crash
Duff & Phelps survey shows top financial services executives see benefits to regulation
NEW YORK – According to the sixth annual Global Regulatory Outlook report published by Duff & Phelps, the global advisor that protects, restores and maximizes value for clients, the financial services industry is seeing some benefits to current regulations, although the industry is dubious that current regulations are sufficient to prevent another crash.
For its 2018 survey, Duff & Phelps surveyed 124 senior financial services executives from across the globe, and published the full results here.
The results were surprising:
- 51% said that financial services regulation will increase market stability, up from 42% in 2017. Forty-six percent said that regulations will help increase investor confidence.
- Forty-three percent view the impact of the Yates Memo positively.
- A full 73% said that regulations will encourage them to improve internal systems and controls, albeit at increased costs, which 95% are expecting.
- Twenty-four percent said they already expect to spend more than 5% of revenue on compliance by 2023; more than a tenth (11%) expect to spend more than 10% of revenue by that time.
- Only 29% think that regulators have established consistent global standards, which one in five (19%) say is the single most important factor in a global regulatory system. Still, 52% said that regulators are improving their ability to coordinate globally.
- However, 85% said that regulatory changes have only partly or not at all created adequate safeguards to prevent a crash.
“Even while the limits of regulation are widely recognized, the increased confidence in the effectiveness of regulation may reflect a growing cultural shift in the financial services industry,” said Julian Korek, Managing Director and Global Head of Compliance and Regulatory Consulting at Duff & Phelps. “What firms still want most is harmonization, ostensibly to reduce the complication and cost of complying with different standards across jurisdictions. But, given the tendency for regulatory alignment to level up without reducing duplication, it remains unclear whether greater consistency would in fact reduce or add to the cost of compliance. Firms should be careful what they wish for.”
Read the full report.
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