Moreover, the survey shows that most firms (70 percent) perform the source screening manually and do not use any tool or support from external parties. Finally, only 20 percent use a global repository to collect regulatory updates and analysis.

Room for improvement
Deloitte Luxembourg conducted this survey to better understand how Luxembourg’s banks and financial services providers collect, examine, and manage information on regulatory developments today, and what impact their approach has on their business and organization. The survey includes the views of financial institutions, especially those active in the pan-European market.

With regard to the level of resources needed, 40 percent of institutions employ 1 to 2 full-time employees to perform the regulatory watch, with over half (60 percent) screening a maximum of 10 regulatory sources.

One-third of the respondents believe their watch set-up could be improved.

Local specificities underestimated
Of those who delegate the function to their corporate group—approximatively 50 percent of the respondents—65 percent stated that local specificities are not sufficiently taken into account.

“Financial institutions need to rapidly assess the operational, IT or organizational impacts of the regulatory changes on their operating model. Industry actors publish numerous alerts which are rather generic and not specific to organizations. The challenge for financial institutions consists in triggering which publications are really important and which will enable them to anticipate the specific business impacts,” commented Simon Ramos, Partner at Deloitte Luxembourg.

“The survey shows that conducting the regulatory watch function requires significant human resources; it also indicates that certain firms may lack the capacity to monitor more than 10 regulatory sources, which means they may be missing out on critical information. Let’s not forget that local regulatory specificities can be make-or-break. To me, it is telling that 75 percent think regulatory watch and tax watch services can be valuable. This indicates that businesses understand they may need to reinforce their existing regulatory watch and monitoring,” commented Anne-Françoise Liégeois, Director at Deloitte Luxembourg.

One size does not fit all
The results of the survey were presented at the Regulatory Watch Survey Breakfast Meeting organized by Deloitte Luxembourg on 9 June, to contribute to a better understanding of how Luxembourg banks and financial services providers approach regulatory developments.

The lively panel discussion with financial services leaders found that a flexible, efficient, holistic, and proactive approach to regulation can make changes more manageable and that one size does not fit all. Moreover, every stakeholder needs to be involved from the beginning—not only compliance but also the executives, legal, IT, risk, and business units. They agreed that cross-border business is in Luxembourg’s DNA. With a holistic, strategic approach, cross-border business does not have to be more complicated than it already is.