Many senior financial services executives are about as worried about the effects of regulations and compliance costs as they are about the economy.[@@]
Researchers in the New York offices of PricewaterhouseCoopers L.P. and the Economist Intelligence Unit Ltd. have published data supporting that conclusion in a report on an informal survey of 201 executives.
Although 40% of the executives said their companies hope to increase revenue about 10% to 20% this year, 33% of the executives said they suspect that their companies’ growth goals may be too optimistic.
When the researchers asked the executives about the principle challenges facing their companies in the coming year, 71% named the competition, but 60% listed general economic conditions as a principle challenge, and 58% listed compliance and regulatory requirements.
Only 2% of the executives said governance and risk management have a lower priority this year than they had in 2004, and 55% of the executives said governance and risk management have a higher priority.
About 54% of the executives agreed that the Sarbanes-Oxley Act of 2002, and similar financial reporting laws and regulations have been distracting company managers from efforts to expand their companies.
“Regulation is not a deterrent to growth, but it is a barrier to growth,” says Nigel Vooght, a PricewaterhouseCoopers partner.
When the researchers asked executives which world regions would provide the best opportunities for growth in the coming year, 31% of the executives named Greater China and 15% named Central and Eastern Europe. Only 12% named North America.