A new report shines a light on how much financial institutions are spending each year keeping abreast of disjointed global regulations.

Disjointed financial regulations across the world are costing businesses up to $780 billion annually, according to a new report. 

A poll of more than 250 financial services executives, carried out by IFAC, the accountancy industry body, finds that companies spent up to 10 per cent of their annual revenue complying with divergent regulations, with smaller players pushed to the wall due to disproportionate costs. 

The $780 billion is spent implementing swathes of rules across different jurisdictions, including setting up separate systems, and hiring staff and external experts. In the case of common standards, companies often have to deal with different interpretations, the report points out.

Brexit is likely to drive up compliance costs, the report finds, as a result of regulatory conflict between the UK and the European Union following their divorce. This forecast is particularly pronounced among UK respondents. 

“The survey highlights the need for increased international regulatory cooperation to reduce the regulatory divergences which are costly on business,” said Marcos Bonturi, OECD director for public governance.

The report comes at a time when rising regulatory costs are putting pressure on wealth and asset managers to consolidate in order to obtain economies of scale and compliance cost savings. Many analysts have forecasted an uptick in deals this year, citing regulatory pressure as a driving force. 

In the US, President Donald Trump’s administration is openly in favour of deregulation, and moving to roll back elements of the Dodd-Frank Act, which was established in the aftermath of the 2008 financial crisis with the aim of improving accountability and transparency in the nation’s banking sector, ousting the “too big to fail” notion.