Anumber of studies and recent news events point to a surprising lack of effectiveness in remediating compliance failures following fines (according to the Financial Times)... why is this?
Some comment that the fines are an affordable cost of doing business (the cynical view) but perhaps the truth is that these are hard problems to solve, and all three lines of defence do not yet have the skills and technology to be effective when also distracted by market volatility and macro events. Solutions might include building a stronger ecosystem of experienced specialist advisors and regtechs, that can bring extreme focus to a critical failure when it really matters...
"There's a lot of evidence, particularly in the UK and the US, in terms of recidivism . . . repeat offending by the big firms after they've been fined for things," said Huw McCartney, a professor at the University of Birmingham and co-author of a 2019 study of the impact of post-crisis fines on the Anglo-American banking markets. McCartney said that in the wake of fines, companies usually put more resources into compliance and monitoring but remediations could be "quite poorly enforced and monitored both within the firm and by the regulators themselves".
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