Coping with Compliance 2018

Executive summary

EU legislation has a profound impact on the Nordic financial sectors. The NFU survey “Coping with Compliance” gives a perspective from inside the sector and sheds a light on how finance employees and consumers seeking financial advice and services are affected by compliance demands stemming from EU legislation.

The purpose of the study is to investigate how regulatory requirements on documentation, information to consumers and Know Your Customer (KYC) effect finance employees’ work and wellbeing, which in turn is linked to consumer outcomes in the form of services, advice and protection. The result paints a picture of increasingly pressured finance employees, who are scrambling to complete their documentation, keep up with KYC requirements and at the same time meet with customers and provide them with good advice and information.

According to the 215 respondents representing over 35 000 Nordic finance employees, the regulatory requirements on documentation, information to consumers and Know Your Customer have increased in the last 2 years. Consequences for the employees include heavier workload and growing stress levels. Over 80% and over 75% respectively of the respondents say this. The majority of the respondents also think that all of the three areas of requirements surveyed are an administrative burden and that they should be simplified.

The rising stress levels in the financial sector should be taken seriously. Not only does stress impact employees’ ability to provide sound financial advice to consumers, but it can also have severe long-term negative effects on health and well-being.

The NFU study show that the respondents views diverge on whether the regulatory requirements have improved the situation for consumers. The majority of the respondents agree that the quality of advice and customer understanding is improved to some extent, but a significant number also state that the quality and understanding actually decreases. If this is the case for some, it could be argued that the regulatory requirements do not live up to the legislators’ main intention; to improve the situation for consumers by giving them a better understanding of financial products and providing better advice. Almost half, 49%, of the respondents also say that one or more of their members within the last 12 months have experienced a conflict of interest between providing good customer service and following rules and procedures. The reason seems to be limitations in time and resources, as well as too complex and time-consuming regulatory requirements. The respondents also indicated a lack of understanding from management that other tasks and targets, such as sales and performance targets, need to be adjusted as the demands from regulatory requirements increase.

In conclusion, employees in the Nordic finance sector are put under pressure from two directions; legislation and management. The employees are calling out for a better balance, where they are given sufficient time and resources to both advice customers and comply with regulation. It is evident from the NFU study that this is not the case today.