IT missing from compliance planning

Only one third of financial services companies involve senior IT staff when planning their compliance programmes.

Yet nearly two thirds of companies plan to adapt their existing IT systems because of compliance demands and another third plan to invest in new systems, according to research carried out by the Economist Intelligence Unit.

Gareth Lofthouse, European director of executive services at the Economist Intelligence Unit, said companies are struggling with a huge change management problem because of multiple compliance requirements.

But leaving IT executives out of the planning could make things worse, he warned. "That can only add to the risk of managing these programmes. It is a recipe for increased cost and delays," he said.

Peter Redshaw, analyst at Gartner, added: "As so much of this work is enabled by IT, it is foolish to go too far without involving them."

The survey, commissioned by process automation vendor Changepoint, found that Basel II compliance was the priority for European companies, followed by Sarbanes-Oxley.

It found that Basel II projects are more complex than Year 2000 and Euro projects, and put the total cost of compliance at $2bn across Europe.

The survey put the cost of Sarbanes-Oxley compliance at £4.4m a year per organisation, and compliance with International Accounting Standards at £15m- £60m for medium to large banks.

External barriers to regulatory compliance included the complexity of regulations, followed by changing regulatory goalposts.

Companies said their biggest internal barriers to compliance included difficulty in collecting all the information needs, and poor coordination between the parts of the organisation involved in compliance.

Two thirds of companies agreed that poorly integrated IT systems add complexity to a project.

Redshaw said companies have to balance their approach to compliance projects.

Making systems compliant for one set of legislation and then moving onto another could result in companies dismantling just-built systems to be compliant with the next piece of legislation, he warned.