Wealth managers fail to prioritize upcoming regulatory changes: Deloitte

Companies in the wealth management and pension industry need to ensure that they are not exposing themselves to compliance risk by adopting a reactive approach to regulatory changes.

In a report on regulatory change management by Deloitte, the firm looked at how three sectors – banking, insurance and pension/wealth/diversified finance – are handling regulatory change.

He found that the superannuation/wealth/diversified financial services industry had taken a reactive rather than proactive approach as it was often aware of regulatory changes but was “often not prioritized which increases the risk of non-compliance from the start”.

The average range of estimated spending for regulatory changes for the sector was $27 million to $143 million with an upper limit of $321 million and Deloitte said it saw a “marked increase” in this sector and the sector. banking following the Hayne Royal Commission.

Some 67% of respondents in the area of ​​wealth management and pensions said they had pressured the regulator to change through industry bodies.

“A high proportion of respondents actively lobby regulators through industry bodies, particularly those in the insurance and wealth management industries. This is likely due to the fact that these areas do not have separate internal regulatory affairs teams.

Positively, Deloitte found that most companies reacted to regulatory changes at an early stage.

More than a third (37%) of companies identified regulatory changes that could affect their organization before the regulations were written.

The most common way to get information about potential changes was through regulatory announcements tracked by industry bodies and updates from professional services. This allowed them to lobby regulators for possible changes and get a first look at its implications.

Some 58% have waited for it to be drafted but not yet finalized and 5% that it has been finalized.

“While the majority of respondents consider the impact of regulatory changes after the publication of the proposed regulations, we observed that an increasing number of respondents had processes in place to identify and consider the impact of potential regulatory changes at an early stage (i.e. before writing), in order to put pressure on regulators and get an early view of potential impacts on their business and operating models.

Dolores W. Simon