Majority of the companies in the Middle East region expect the cost of senior compliance staff to increase this year, up from 57 per cent in 2014, said a report.

It may be that perceived geo-political risk is at least one factor in recruiting and retaining staff in the region. Another factor is the perception that personal liability is expected to increase (84 per cent) in 2015, stated Thomson Reuters, a leading source of intelligent information for businesses, in its annual cost of compliance survey.

Regulatory fatigue, resource challenges and personal liability are expected to increase throughout the year, it added.

Thomson Reuters surveyed nearly 600 compliance practitioners from financial services firms including banks, brokers, insurers and asset managers around the world encompassing Africa, the Americas, Asia, Australia, Europe and the Middle East.

These findings are a reflection of the sheer volume of regulatory change that continues to be anticipated, as firms navigate both international and domestic rules which have global impact with resulting overlaps, said the company.

The regional variations show divergence, with the Middle East peaking as the region that expects senior compliance staff to cost significantly more in 2015.

Two-thirds of respondents expect skilled staff to cost more, which is in line with the two-thirds who expect their available budget to increase, said the report.

Respondents from the US are expecting the lowest rise in personal liability (50 per cent), compared with the Middle East where the vast majority of respondents (84 per cent) are anticipating an increase, the survey stated.

The least partial good news for Middle Eastern compliance functions is that this increase is matched by an anticipated increase in the cost of staff and available budget, it added.

According to the survey, global systemically important financial institutions (G-SIFIs), given their larger size of operations and resources, are better equipped to manage these 2015 findings as opposed to smaller non-G-SIFIs.     

The findings also highlighted the diverse pressures which compliance functions continue to face, with broadening compliance remits, no let-up in the volume of regulatory change and the growing pressure on compliance budgets.

“The survey has become a voice for compliance practitioners,” said co-author, Stacey English, the head of Regulatory Intelligence, Thomson Reuters.

“The open concerns and views that participants shared provide real insight into the practical reality and challenges of compliance functions around the world,” he added.

The key findings from the 2015 report include:

•Ever-increasing regulatory change: Compliance officers express regulatory fatigue and overload in the face of snowballing regulations. About 70 per cent of firms are expecting regulators to publish even more regulatory information in the next year, with 28 per cent expecting significantly more.
•Rising personal liability: About 59 per cent of all respondents (53 per cent in 2014) expect the personal liability of compliance officers to increase in 2015, with 15 per cent expecting a significant increase, compared to twenty-one percent of G-SIFIs who expect a significant increase in personal liability.
•Growing resource staffing challenges: from recruitment challenges in finding and retaining suitably skilled staff to increasing pressure on compliance staffing budgets, 69 percent of respondents expect the cost of senior compliance professionals to increase in 2015.
•Regulatory matters:  are consuming disproportionate amounts of board time, from correcting non-compliance and preventing further sanctions to implementing structural changes to meet new rules.

“For any regulated firm to thrive or at least survive into the medium- and longer-term, consistent investment needs to be made in the risk, compliance and control functions,” stated Phil Cotter, the managing director for Risk, Thomson Reuters.

"We have seen an ongoing rise in compliance leaders expressing regulatory fatigue as they are being held to increased accountability amidst an ever-escalating volume of regulation, the expectation of being knowledgeable, and the added pressure of being exposed to record fines for non-compliance," observed Cotter.

"With heightened scrutiny and accountability, it has never been more vital for boards to continue to support the compliance function and senior leadership with the budget, resources and tools to help ensure a culture of transparency, trust and adaptive-change in behaviors throughout firms," he added.

While a skilled, high-quality compliance function is expensive to build it will be one of the best investments for a firm and its senior managers. Many firms have employed more compliance staff but there is a growing need for more truly skilled compliance officers.

The results show a consistency of expectation that the costs of skilled compliance staff will continue to rise, but the growing issue is in the availability of high-quality skills and experience. Over two-thirds of firms are expecting skilled staff to cost more.

“Given the relentless pace of change and the need to implement layers of often mismatching cross-border regulatory requirements, compliance officers may wish to begin to think through how they can help their firm to “future proof” changes made, and in turn get the very best value out of their investment made into systems, technology and personnel,” said co-author, Susannah Hammond, senior regulatory intelligence expert, Thomson Reuters.

“A firm’s ability to “future proof” will become ever more critical throughout 2015 as many big implementation programs for major complex legislation take effect,” she added.-TradeArabia News Service