Wealth managers failing to prioritise upcoming regulatory change: Deloitte
Firms in the wealth management and superannuation space must be wary not to put themselves at risk of non-compliance by taking a reactive approach to regulatory change.
In a report on managing regulatory change by Deloitte, the firm looked at how three sectors- banking, insurance and superannuation/wealth/diversified financials- were handling regulatory change.
It found the superannuation/wealth/diversified financials sector took a reactive approach rather than a proactive one as it was often aware of regulatory change but it was “often not prioritised, which increases the risk of non-compliance early on”.
The average range of estimated spend on regulatory change for the sector was $27 million-$143 million with an upper limit of $321 million and Deloitte said it had seen a “marked increase” in this sector and the banking sector as a result of the Hayne Royal Commission.
Some 67% of respondents from the wealth management and superannuation space said they lobbied the regulator for change via industry bodies.
“A high proportion of respondents actively lobby regulators through industry bodies, particular those within the insurance and wealth sectors. This is likely due to these sectors not having a separate internal regulatory affairs team.”
Positively, Deloitte found most firms were reacting to regulatory change at an early stage.
Over a third (37%) of firms were identifying when regulatory change could affect their organisation before the regulation was drafted.
The most-common way to source information on potential changes was via regulatory announcements followed by industry bodies and professional services updates. This allowed them to lobby regulators for possible changes and have an early view of its implications.
Some 58% waited until it had been drafted but not yet finalized and 5% waited until after it had been finalised.
“Whilst the majority of respondents consider the impact of regulatory change following release of draft regulation, we observed a growing number of respondents had processes in place to identify and consider the impact of potential regulatory changes at an early stage (i.e., before drafting), in order to lobby regulators and have an early view on the potential impacts on their business and operating models.”
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