In a survey conducted by advisory firm Duff and Phelps, 89% of managers, brokers and banks believed the cost of regulation was increasing, and feared the current 4% spent on complying with regulation would more than double by 2022.
Costs are expected to rise as the requirements of compliance teams develop, with the risks posed by cybersecurity also climbing up the agenda.
Nine out of ten firms surveyed said they would increase the resources allocated to cybersecurity in anticipation of incoming regulation.
However, despite the concerns over regulation requirements, two-thirds of firms say they are not prepared for the introduction of the likes of Mifid II in January next year.
Julian Korek, global head of compliance and regulatory consulting at Duff & Phelps, said the “pendulum is swinging” away from pure financial regulation and increasingly looking to the fight against cybercrime.
He added: “Skyrocketing costs mean that firms have had to decide which regulations to prioritise, meaning that some will miss the already extended MiFID II deadline.
“More guidance is needed from the regulator about how firms should allocate their time and money when complying with regulation, especially as the cost of Brexit, changes in US policy and cybercrime continue to emerge.”
