Compliance issues appear to be an area where financial services firms will continue to require legal support in the coming years, according to the survey findings. Meeting regulatory obligations grows more demanding year over year, and firms are seeking support from external experts to efficiently balance their compliance programs with their core business activities.
Over two-thirds of lawyers (68%) stated that they believed global regulatory developments impacted their clients by increasing their costs. Of that same respondent pool, however, a larger-than-expected proportion of lawyers, 30%, believed that regulation actually created more opportunities for their clients to grow.
Regulation in the financial services industry has traditionally been perceived by the industry as overly burdensome and, in some cases, counter-productive. The fact that nearly one-third of lawyers surveyed believed that regulation has had a positive impact on their clients’ businesses illustrates that firms can capitalize on competitive advantage opportunities through having a robust, fit-for-purpose compliance approach.
However, the survey also revealed some skepticism among lawyers as to the effectiveness of the regulators. Only 8.5% of applicable respondents agreed with the following statement:
“The regulatory agencies/bodies are succeeding in introducing and implementing rules/regulations that create balanced, orderly markets for participants.”
This finding aligns with Kinetic Partners’ research in the 2014 Global Regulatory Outlook publication, where only 3% of financial service professionals surveyed globally believed that the regulatory changes implemented since 2008 have done enough to prevent a future crash. Furthermore, just 12% of respondents believed that regulators fully understood how the financial crisis was allowed to happen in the first place.
Without agreement over the causes of the crisis, it’s not surprising that firms doubt the effectiveness of recent regulation. There is still a lot of scope for collaboration between the industry and regulators to establish an effective framework – especially given that political pressures are never far away when discussing financial regulation.