Company’s culture key to solve regulatory challenges, Kinetic Partners finds

More than 80% of financial services industry chief executives think that a company’s culture will be a very important factor to solve regulatory challenges, according to a new study published by professional services firm Kinetic Partners.

About 90% of chief compliance officers at asset management, hedge fund and banking firms said culture is a key challenge.

Moreover, more than two-thirds of the senior managers felt that a company’s culture was the most important part of the governance function to get right in order to avoid significant regulatory problems, compared with finding staff with the right regulatory skills (3%) and a relationship with the regulator (1%).

Although the majority of respondents stated that the availability of commercial opportunities has the most influence on where they look to do business, the existence of local regulatory requirements was listed as the second most important factor.

“Getting the culture right so that people make the right choices is essential for financial services firms, and will define the way the firm does business and the way it interacts with clients and prospects. That’s why so many of the industry leaders we spoke to see this area as key battleground in terms of getting regulation right, but also as a potential minefield,” said Julian Korek (pictured), founding member of Kinetic Partners.

According to the firm, the financial crisis has moved national financial stability to the very top of the regulatory agenda, and has therefore caused a shift away from the global integration of financial services and towards more localised regulation instead.

“A move towards centralised, cross-border regulation is inevitable for banks, but the debate about its suitability for the rest of the financial services industry is still ongoing. The industry’s argument is that national regulators better understand the culture of their own jurisdictions, and many regulators have accepted the legitimacy of this argument,” Korek said.

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