“Regulations Pushing Up Financial Firms Costs” Finds Study. Burden: “60 Rule Changes Every Working Day” –Financial Times

In an article titled “Regulation ‘Pushing Up Financial Firms’ Costs” The Financial Times‘ chief regulation correspondent Brooke Masters  reports that extraterritorial regulations, rules that affect businesses outside the country that enacts them, are pushing up costs and driving banks, insurers and asset managers away from particular markets, a survey of global financial firms has found.  

More than half the groups that participated in a survey that the Protiviti regulatory consultancy will unveil on Monday said they had decided not to enter – or had exited – specific countries because of concerns about their laws and regulations.

Nearly that many, or 45 per cent, said they are spending between a 10th and a quarter of their compliance budget dealing with laws outside their home bases, a significant increase that many respondents tied to the 2008 financial crisis.

US laws such as the Dodd-Frank financial reform legislation and the Foreign Account Tax Compliance Act were cited by overseas groups as particularly intrusive and onerous.

“In countries like the US, where the regulatory burden is seen as particularly big, firms are looking at how can we reduce our US footprint and the impact of Dodd-Frank,” said Bernadine Reese, managing director at Protiviti.

Their survey of more than 40 institutions in 19 countries comes at a time when lawmakers and regulators around the world are pushing through a record number of reforms aimed at making the financial system safer. One recent study suggested financial services firms were being hit with 60 rule changes every working day.

Many new rules, particularly in the US, UK and EU, deliberately reach out and affect business outside the enacting jurisdiction. For example, the EU’s first alternative investment fund managers directive has profound consequences for every fund manager and custodian bank worldwide that wants to do business with investors inside the 27-nation bloc, and the UK has made clear that its new Bribery Act prohibitions on corrupt payments can be enforced against companies that are based elsewhere.

Government officials around the world have expressed concern about the US “Volcker rule” which bans proprietary trading by US banks, even in their overseas arms.

Full article here (free registration required). 

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