A quarter of executives list financial and common reporting as their biggest headache, closely followed by Solvency II and Basel III

Common Reporting (CoRep) and Financial Reporting (FinRep) rank first on the list of regulations that financial services find most challenging, according to new research from financial data management provider,
AutoRek.

The survey of senior business executives suggests that organisations are struggling with demands to provide more information on risk exposure and capital data to regulators. A quarter (25 per cent) of respondents admit that the increase in the complexity, granularity, frequency and volume of information required for CoRep and FinRep is a challenge as the European Banking Authority (EBA) seeks to standardise reporting to national regulators. This is closely followed by 22 per cent of executives that list Solvency II, the EU legislation requiring businesses to hold enough capital liquidity to cover the level of risk within the business, as their biggest headache. A further 17 per cent of executives name Basel III, the regulation that requires banks to hold enough cash or liquid assets to meet liabilities for a year, as their biggest challenge.

Jim Muir, director of AutoRek, comments on the research findings: “Regulators are focused on creating a more controlled market and demanding more risk and capital data to increase their visibility into the governance and accountability of organisations. As firms start to recognise that the longer term-trend is for providing more data, and faster, investment in new financial controls and strong data management practices is becoming a strategic imperative for the business.”

Currently, those in the insurance and banking sectors are the biggest spenders on financial controls, with 14 per cent of insurers reporting that they currently spend more than £2 million per year on the financial controls agenda, and 6 per cent of banking professionals spending more than £5 million per year for this purpose. However, despite the challenges associated with meeting new regulations, the survey suggests investment in financial controls including people, processes and systems is deemed as a ‘help’ in achieving growth with 82 per cent admitting that it enables more rigorous profit and loss control.