According to Thomson Reuters data, global compliance regulations increased 5-fold from 2009 to 2019. No rest for the weary…more are on the way as Brexit, the LIBOR phase-out, and other States’ equivalents of CCPA are forthcoming, just to name a few.
Integreon recently commissioned its first Regulatory Readiness Report to benchmark how this expanding regulation explosion is impacting corporations and their law firms. Conducted by Pensar Media, the Integreon Report surveyed 200 compliance and legal professionals in the US and UK. Many on the corporate side reported that the regulations are resulting in more operational pressure and risk for them, as well as hindering profitability and growth. Those working at law firms said they are being pressured to reduce costs and ramp up quickly to advise clients on regulatory events. Report results showed a staggering 82% of corporations agreed that responding to regulatory change creates operational pressure for their business. 68% said responding to regulatory change increases their business’s risk profile, and 69% agreed that increased regulation is having a negative effect on profitability and growth.
Resource limitations are definitely coming into play, as only 35% of corporations completely agree that they have the resources and budget to adequately achieve and maintain compliance. 27% said their biggest challenge is not having enough internal staff to help support regulatory change response, followed by not enough technology investment (21%) and disruption to business-as-usual activities (14%).
With corporations strained by compliance requirements, it’s no surprise that 62% of law firms responded that clients are squeezing them for costs when delivering legal solutions and services in support of regulatory change. Law firms reported limited resources, too. Only 37% of law firm professionals completely agreed that their firm had the internal resources to help multiple clients with regulatory change simultaneously, meaning that 63% had inadequate resources. 41% of firms stated that they are alleviating those pressures by either outsourcing to alternative legal service providers or relying on their offshore captive operations.
Many corporations and law firms are feeling the pinch of too many regulation requirements and not enough internal resources. This is driving them to leverage external human and technology automation help from managed services providers like Integreon to support their compliance efforts.
Compliance & Regulatory Support
On a granular level, the Integreon Report also gauged compliance readiness for established data privacy legislation like General Data Protection Regulation/GDPR (EU) and California Consumer Privacy Act/CCPA (State of California – US) and preparedness measures for specific upcoming events like the LIBOR reference rate transition, Brexit and Initial Margin Phase 5 (IM5).
Highlights of regulation-specific preparedness among survey respondents included:
- 38% of corporations are still not fully compliant with GDPR, even though the regulation came into force in May 2018.
- 41% of corporations are not fully compliant with CCPA, and 55% are compliant even though CCPA just activated on January 1, 2020.
- 53% of corporations believe they are well-prepared for the LIBOR transition as the LIBOR reference rate expires on December 31, 2021.
- 56% of corporations believe they are well-prepared for Brexit.
- Only 43% of corporations believe they are ready for IM5 (deadline September 1, 2021).
Integreon’s Contracts and Compliance Services practice group and LIBOR Task Force are seeing an influx of projects because corporations and law firms need specialized assistance. We are helping them to shoulder the overwhelming workload resulting from regulatory readiness activity. Achieving compliance with current regulations while preparing for upcoming transitions like LIBOR, Brexit and IM5 is a massive undertaking which requires highly skilled people, innovative technology, and experts on change and program management.
Whether we are assisting financial institutions with repapering contracts for LIBOR, ensuring business controls and compliance, or managing risk, Integreon aims to be a flexible, essential part of a corporation’s or law firm’s resource team. We are versatile enough to create scale at all stages of the supply chain. Find out more about Integreon’s Contracts, Compliance and LIBOR services at www.integreon.com.