The growing volume of regulations and the pressure to do more with less are taking their toll on compliance teams in the financial services industry, many of which feel they've reached a saturation point in their ability to successfully manage compliance.

That's according to the findings of a recent study by Thomson Reuters Governance, Risk & Compliance, which surveyed more than 500 compliance professionals at financial services companies around the world, including banks, insurers and fund managers.

According to the study, 84 percent of compliance professionals said they expect to handle more regulatory information in 2012, with 45 percent expecting the level to be “significantly higher.”

Some of the anticipated regulatory changes expected in the coming year include, among other regulations:

The splitting apart of the U.K. Financial Services Authority;

An increase in the direct regulatory power of the European Supervisory Authorities;

The expansion of several new and existing regulatory agencies in the United States as a result of the Dodd-Frank Act; and

The increasingly global reach of regulations such as the UK Bribery Act and the US Foreign Account Tax Compliance Act.

The already rapid pace of regulatory activity is only expected to accelerate. “We have been tracking a fairly steady 16 percent year-over-year increase in global regulatory activity, with nearly 60 new regulatory announcements every working day,” said Scott McCleskey, global head of financial services regulation, Thomson Reuters GRC.

“As a result, compliance teams are reporting that they are increasingly strained in their ability to fulfill their myriad of responsibilities, which are critical not only to their own businesses, but also in maintaining the proper coordinated functioning of markets around the globe,” McCleskey added.

According to the survey, 40 percent of compliance professionals say they spend more than an entire working day each week trying to stay up-to-date with regulatory changes and assessing their impact on the business.

The findings show that the issue is particularly acute in Asia, where more than 30 percent of compliance officers are devoting more than 10 hours a week to tracking and analyzing regulatory change. This is followed closely by the UK, where 25 percent of firms devote in excess of 10 hours to this activity.

At the same time, compliance teams say they have difficulty finding time to coordinate with internal audit, risk management and legal functions to help ensure a consistent, integrated and holistic approach to risk identification, management, and mitigation.

The situation regarding coordination and alignment with internal audit is particularly concerning, with 52 percent of respondents spending less than one hour each week liaising on compliance issues. Thirty percent of compliance functions say they similarly spend less than one hour a week consulting with their legal and risk teams.

While keeping executive management informed of regulatory issues is a key part of the compliance role, 27 percent of respondents say they spend less than one hour a week reporting to their boards. In the United States, more than half of the companies surveyed spend less than one hour a week reporting to their boards, raising concerns about whether executive management is being kept sufficiently informed on compliance issues.

“Compliance officers at regulated firms are finding themselves under increasing pressure from all sides,” said McCleskey. The need to be diligent and pro-active in today's fast-changing regulatory environment is critical, and yet “rather than gaining the upper hand in managing compliance functions, many companies are increasingly struggling to keep up,” he said.

Compliance costs are rising, partially due to increasing demand for experienced compliance professionals. Seventy percent of respondents expect the cost of senior compliance staff to be higher this year.

At the same time, only 11 percent of companies are expecting a significant increase in their budget for compliance. This raises serious concerns about whether budget levels will be sufficient to cover the expected increase in the scope and volume of regulatory change.

Firms have to make critical decisions about where to allocate scarce resources. As the survey concludes, “An effective compliance risk assessment which takes account of trends, changing regulatory expectations and benchmarks regulatory approach with peers is vital to help firms focus their limited compliance resources and achieve more with less.”

A full copy of the report can be downloaded at: http://accelus.thomsonreuters.com/Costofcompliance