Compliance Becoming More Costly

“The UK Financial Conduct Authority (FCA) alone, during the period of 2019 to 2021, imposed fines of £1.1bn. In 2019, the Securities and Exchange Commission (SEC) in the US, issued 862 enforcement actions resulting in fines totalling $4.3bn.”, according to the Report KPMG produced in collaboration with Innovate Finance.

As RegTech adoption becomes more widespread on the heels of the FCA’s guidelines for third-party outsourcing, Qomply has seen an increase in uptake of its services since its inception in 2019.

Typical USE CASE for Qomply

FCA Warns Investment Firm of Issues in Report Quality

A mid-size investment firm approached Qomply with a complicated, yet not uncommon, scenario. The firm had multiple trade capture systems operating independently of one another and, in some cases, each having its own set of static data. There was no centralised method of capturing client data and, to complicate matters further, a number of IT migration projects meant that, at times, their trade data was duplicated and inconsistent.

Each new trade capture system or methodology unknowingly disturbed processes that ultimately led to undetected reporting issues.

In addition, the client also had the following issues:

Quality Assurance processes were viewed only as an “ad-hoc” function conducted when time permitted or if there was a specific objective to trigger such an exercise. Budgets and resources were stretched.

In order to meet the MiFID go-live deadline in 2018, the solution was rushed through to implementation with appropriate compliance oversight.

Compliance was understaffed and budget constraints meant that finding a transaction reporting expert to guide the development team was impossible.

The client received warnings from the FCA on the quality and accuracy of its data reported back to the start of MiFID II in 2018.

Qomply’s Operational Benefit for the Client

By adopting Qomply, the client benefited from:

1) Significantly improved accuracy and quality of their reporting

2) Substantial cost savings – up to 80pct of the costs (excluding notional savings from regulatory penalty) of doing the work in-house

3) Rapid access and integration

- Instant access to a plug-and-play, cloud-based solution meant client was onboarded within a week

- Integration of new daily operational tasks and a Systems and Controls Framework within the month

4) Proactive identification of issues and a solution. Through the Qomply output, the client proactively identified issues before the regulator. They were able to introduce technology enhancements and strengthen operational functions on heels of issues identified by Qomply.

5) Independence from recruiting specialist staff. Since Qomply provided detailed descriptions of errors and potential resolutions, the existing team could resolve issues without having to recruit additional staff and experts.

6) The prevention of BAU erroneous reporting to the FCA.