There’s no question that complying with financial services industry rules and regulations costs money. In addition to personnel expenses that come with hiring and retaining qualified compliance professionals, firms also incur expenses related to establishing, implementing, enforcing, and testing policies and procedures reasonably designed to achieve compliance. While the cost of compliance may seem high, being out of compliance can cost firms significantly more.
Regulatory fines and penalties for non-compliance are steep. In 2018, non-compliant firms were subject to $3.945 billion in penalties and another $794 million in judgements related to SEC investigations and complaints, while FINRA imposed $61 million in fines. These numbers are staggering, but the reality is that they are just the tip of the iceberg for firms without strong regulatory compliance programs in place.
Business disruption related to being out of compliance, including regulatory fines, lost productivity, lost revenue, a loss of customer trust, and operational expenses related to remediation, cost firms nearly three times the cost of being in compliance in fiscal year 2017. The average cost of compliance came in at $5.47 million, while non-compliant firms paid an average of $14.82 million. In fact, the average cost of non-compliance has risen 45 percent compared to the average cost in fiscal year 2011.
The infographic below depicts a summary of the cost of non-compliance. For a more in-depth look, download our whitepaper “The True Cost of Non-Compliance“.
Get the right compliance program in place
Reevaluate your firm’s compliance program to keep clear of fines, reputation damage, and the true costs of being non-compliant. Learn how with a ComplySci Demo.