Switzerland

Road to compliance 

The financial markets of the future will be characterized by transparency, increased consumer protection and further regulations (e.g. capital requirements, cross border rules, etc.). There are planned to restrict financial institutions within narrow confines while enforcing the already existing regulatory framework on a global level.

What is at issue?

The potential sanctions of non-adherence to existing and upcoming rules have increased to a level where they can put the existence of a non-compliant bank or even the entire market place in which the bank is operating at risk.

 

The implementation costs of the existing rules (if not already implemented) as well as the upcoming regulations will be significant and typically cannot be passed on the clients. Given the current low interest and low margin environment, these costs can become as significant that it is no longer sensible to operate in a certain market (or to provide services to a certain customer group).

What challenges do financial institutions face?

The complexity of the regulatory framework in which a bank is operating, has achieved a level, where the mitigation of the risk of non-compliance to an acceptable level has become more and more difficult. Furthermore, compliance costs have increased so significantly, that they can become a decisive factor if a bank is competitive in a given market. Given the recent trends in regulations as well as the sanctions taken (and or currently discussed), it will be important that:

  1. a financial institution only operates in markets in which compliance can be ensured; and 
  2. compliance costs can be reduced to a level at which a financial institution is still competitive in its key markets

How to minimize compliance costs?

Compliance costs can be minimized by limiting the business to key markets and the streamlining of projects to implement the given rules and regulations in an efficient way. The selection of key markets is performed during an impact analysis. The costs associated with the individual markets in which a financial institution operates, is thereby compared to the income currently (and planned to be) generated.

 

To evaluate these costs, the most effective way of implementing the required regulations is considered by identifying the existing synergies between the individual requirements and/or markets. A standardized framework builds the basis to systematically assess the individual regulations and enables a working group or committee (“the compliance committee”) to identify these existing synergies.

 

How can KPMG support you?

 

The “compliance committee” represents a meaningful solution for gathering and implementation of the regulatory requirements. We support you in structuring and implementing the committee, that will have the following functions: 

 

  • Impact analysis of new or changed rules on the organization
  • Identification, coordination and realization of synergies
  • Prioritization of activities (where to allocate the limited resources)
  • Information and training of staff
  • Adequate resource planning.

 

Furthermore, we will provide your committee members with the required information and training on the regulations applicable to your organization as well as the framework that will enable the committee to perform its main activities.

Michael Schneebeli

Michael Schneebeli

Partner, Financial Services

+41 58 249 41 06

The KPMG Compliance Cube

Teaser Image Compliance Cube
The Cube represents the framework to perform impact assessments of new regulations as well as on a financial institution as a whole.

Legislative Texts

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An overview of legal publications