Compliance spending is growing at a faster pace than income at many of the largest U.S. financial institutions. Though that trend will likely continue, some firms are making investments in technology and integrating systems, which should ultimately cut costs, according to a report from Deloitte & Touche USA.
For the study, "Navigating the Compliance Labyrinth," Deloitte surveyed 20 of the top 50 banks and thrifts--80 percent of which had securities businesses, and 75 percent engaged in investment management. Compliance spending at the institutions grew by an average of 159 percent from 2002 to 2006, says the report. As a percentage of net income, compliance costs rose to 3.69 percent in 2006, up from 2.83 percent in 2002. Compliance costs varied significantly among institutions, notes Deloitte, suggesting that some may manage the function more effectively.
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