Exec Survey: Regulation Hurts Our Growth
By Jim Connolly
NU Online News Service, April 26, 4:28 p.m. EDT?A majority of financial services executives think regulation is hurting their revenue growth, according to a major consulting firm survey.[@@]
The poll of 201 senior executives conducted by PricewaterhouseCoopers and Economic Intelligence Unit, both in New York, also found that 40 percent of financial services companies have revenue growth targets of between 10 and 20 percent even though executives feel they may be overly optimistic.
PwC reported that fully 33 percent of those surveyed believed that the 10-to-20 percent targets may be too optimistic and wondered whether they would be achievable.
Among other points the survey covered was a finding that China and Central and Eastern Europe were viewed as the best opportunities for growth in the coming year, and that there was concern over the impact of regulation on growth.
According to the survey, thirty-one percent of respondents said that greater China would offer the most growth, followed by Central and Eastern Europe, with 15 percent. North America ranked fourth, with 12 percent, and South and Southeast Asia ranked fifth, with 11 percent.
Among the concerns that surfaced in several of the questions was proper corporate governance and the impact of regulation.
Governance and risk management were ranked a higher priority than the previous year by 55 percent of respondents, compared with 44 percent who said it had the same priority and 2 percent who said it had a lower priority.
When asked what would be the principal challenges faced in the coming year, compliance and regulatory requirements ranked third, with a 58 percent response, behind levels of competition, with 71 percent, and macroeconomic conditions, with 60 percent.
Participating executives also responded to questions about regulation in which they were asked to agree or disagree. The respondents agreed that greater regulation was hurting the ability to reach growth targets (55 percent); slowing international expansion (54 percent); creating a fairer playing field to reach growth targets (51 percent); and, dampening risk appetite and stifling growth potential (58 percent).
The survey also addressed the Sarbanes-Oxley Act of 2002. Executives were asked whether compliance with that law and similar legislation is distracting management from pursuing a growth agenda. A total of 54 percent agreed.
"Regulation is not a deterrent to growth, but is a barrier to growth," according to Nigel Vooght, a PwC partner. He says that feedback from companies suggests that executives want regulators to coordinate regulation so that there won't be different sets of regulation for different regulators.
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