Budgeting for Compliance in 2017 – Making the Case for Additional Dollars
Every year, Chief Compliance Officers (CCOs) must prioritize their company’s compliance risks and consider which areas will have the greatest impact on the budget in the coming year. IMP meets informally with a number of CCOs and compliance professionals on a regular basis, to discuss budget plans and the best approach to allocating funds. Universally, clients and contacts reported that their compliance requirements had increased since the passage of Dodd Frank, and that they continue to face challenges in obtaining adequate funding to support the increase in regulatory obligations.
In addition to covering growing regulatory burdens, CCOs have seen an increase in responsibility as the use of technology and automated trading compliance systems have intensified. Andrew Donohue, Chief of Staff at the Securities and Exchange Commission (SEC), told delegates at the 2016 National Society of Compliance Professionals annual conference in Washington, D.C., that “many firms currently employ technology systems that were developed several years, if not decades-ago. Although perhaps once considered cutting edge, these legacy systems are being required to perform functions for which they were not intended-and often not ideally suited. Updating or even replacing these legacy systems, and effectively integrating them, presents a significant business and compliance challenge.”
This leaves compliance officers in charge of understanding how, when and what they need to make the necessary updates in technology. All the while, they face an uncertain global regulatory environment and more complex portfolio construction.
With competing forces urging them to either cut or keep spending level, the budgetary environment for compliance can be a challenging arena to plead the case for additional dollars.