Financial services companies are almost matching government regulatory costs with their own self-inflicted rules, and effectively "choking themselves in red tape", a report says.
Despite being one of the industries with the highest regulatory burdens, particularly since the global financial crisis, financial services firms are still imposing additional and potentially unnecessary compliance costs to their budgets, according to Deloitte's Access Economics report Get out of your own way: Unleashing productivity.
The report showed one in five workers in the financial services realm were involved in some form of compliance work, with the ratio continuing to grow.
Some executives and middle managers were spending nine hours a week dealing with their own rules, it said.
The spending and associated red tape is particularly significant given the level of regulation imposed by the government, Deloitte Financial Services Risk and Regulation leader Kevin Nixon said.
"The sector — and authorised deposit-taking institutions in particular — have to deal with a greater intensity of imposed regulation than most, so the current Financial Services Industry Inquiry led by David Murray which is due to report its recommendations to Government in the next four weeks, is of particular relevance at this juncture," he said.
His colleague, Deloitte Banking Regulatory leader Tim Oldham, blamed post-GFC nerves for the trend, but that it needed to be unwound.
"The GFC created such anxiety about risk that self-imposed risk appetites were progressively tightened at all levels of the organisation" Oldham said.
"The key lever the financial services industry can use to manage the plethora of self- imposed rules is to challenge current duplications around processes and controls.
"By taking the view of what should go right as opposed to what could go wrong, we can help to create a culture of performance rather than compliance. We can also engage the organisation in identifying and removing the ‘dumb' rules."