According to a survey by Complinet, a provider of compliance solutions, 77 per cent of financial gatekeepers warn that the next global crisis is "imminent". The survey, called The Forgotten Crisis: As Markets Start to Recover Has Anything Really Changed?, found that the majority of regulators predicted a significant economic downturn within the next five years.
"The continuing lack of company transparency and accountability to the markets and the public makes the possibility of another crisis almost assured," warned one anonymous respondent. The survey revealed that only 40 per cent thought their firm had changed its habit of rewarding based on a better understanding of risks associated with the business. In other words, risk takers are still being rewarded, although at least they acknowledged that those outside the financial world resent the bonus culture. When asked, do you believe the current bonus culture encourages uncontrollable risk-taking, questionable valuation practice or short-term attitudes to performance and product life-cycles? 72 per cent answered "yes".
But the survey also showed that 62 per cent of senior management think they are putting the right controls in place. They probably also think they deserve a bonus for doing so. The survey of 232 global compliance officers was made up of 34 per cent from the banking sector, 9 per cent from insurance, 32 per cent securities, 7 per cent legal and 18 per cent other sectors of the financial industry. A significant number also felt there was a danger of over-regulation. "Regulatory reform and implementation of effective compliance solutions are clearly vital to avoid another crash," says Paul Johns, the vice president of global markets at Complinet. "The key message from this survey is financial institutions must ensure they have enough compliance resource to navigate through the regulatory maze and reduce the risk of falling foul of the rules."
Another message might be that if you do not listen to the barking dog, you risk being burgled. @Email:rwright@thenational.ae