UK financial services falling foul of rising regulatory compliance

More than a third of UK financial services firms (36%) have been penalised for regulatory compliance failures in the last 12 months, according to recently published research that suggests there is an increasingly challenging regulatory landscape.

The survey, conducted by Consulting at Davies, found that close to two-thirds (62%) of firms have found it more challenging to keep up with regulatory compliance demands over the last five years.

In fact, regulatory compliance was selected as the second-biggest challenge facing firms (43%), just behind economic turbulence (44%).

The research, which canvassed 500 senior decision makers at UK-based financial services firms, comes almost a year after the introduction of the Consumer Duty by the Financial Conduct Authority (FCA).

The survey also found that 63% of firms, including insurers, have changed the way they serve customers since the introduction of the Consumer Duty.

In contrast, another survey, conducted by financial services review site Smart Money People, found that 84% of consumers reported no improvement in service levels from financial services firms.

The final deadline to comply with the regulation, which is designed to increase consumer protections, comes on 31 July.

This comes just weeks after the installation of a new Labour government in the UK, and it remains to be seen if there will be amendments to the regulation as a result of the change.

For example, legal website Law360 has suggested there could be a clash between the government and the FCA over what constitutes a “vulnerable person”.

And according to Consulting at Davies, its survey underlines the challenges involved with a constantly changing regulatory environment.

“The regulatory compliance landscape is constantly evolving, and our research shows just how many businesses in the UK’s financial services industry are struggling to keep pace with the changes taking place,” said Silvia Amoros, co-lead of the firm’s banking and markets EMEA practice.

“Failure to do so is not only likely to incur significant penalties, but can also bring huge damage to a company’s reputation.”