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21 June 2013

Financial institutions "under greater regulatory pressure" in US

Content team

Banks and credit unions that do business in the US say they are under more pressure than ever due to a range of new regulatory and risk management requirements they must meet.

This is according to a study conducted by Wolters Kluwer Financial Services, which revealed the results of its first Regulatory & Risk Management Indicator. The index started with a baseline of 100, but after more than 430 companies offered their feedback on the current situation, this rose to 136, indicating a significant increases in challenges.

The study used ten factors to calculate the risk environment for financial institutions, seven of which are based on direct input from respondents about their key concerns, while three were based on the latest regulatory data.

It found there are four key pressures that drive the index up. These include a number of new banking regulations and an increase in the dollar amount of fines issued for being non-compliant with these.

Companies also have to devote a larger amount of resources to deal with these issues, while senior leadership are also facing extra challenges when it comes to controlling and managing risk in the organisations.

"It's apparent from this first reading that banks and credit unions are more increasingly concerned with managing the growing amount of regulatory change on the horizon," stated Timothy Burnison, vice-president and senior director at Wolters Kluwer's Risk and Compliance Consulting Practice.

He added: "They're also looking to their executive teams and boards to play a more significant role in helping to mitigate and control the many regulatory and operational risks they face on a daily basis."

Larger institutions in particular were found to be concerned over their ability to meet new regulations and demonstrate they are in compliance. Banks and credit unions with more than $7.5 billion (£4.84 billion) in assets were found to be much more likely than smaller firms to have hired extra compliance and risk management specialists to deal with this, with 60 per cent of firms having done so.
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Content team, Bureau van Dijk

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