Can The Timebank save you £33.9billion a year?

The answer to that headline question is maybe, as compliance costs UK financial services firms a staggering £33.9 billion a year, according to PwC’s latest report, in collaboration with TheCityUK.

According to the research, firms now spend more than 13 per cent of their operating costs on compliance each year. And that figure excludes additional burdens such as capital, liquidity and ring-fencing requirements.

In other words, compliance is not a line item. It is a business model.

PwC’s researchers interviewed chief compliance officers and senior compliance specialists across the industry. Their conclusion was clear. Firms feel compliance costs have risen materially and continue to do so.

More than eight in ten firms reported either an increase or a significant increase in compliance costs over the past five years. Over half said costs had increased. Nearly a third said they had increased significantly. Very few reported the opposite.

One of the more interesting findings is the impact this is having elsewhere in the business.

“The heavy compliance load threatens to divert resources away from innovation and new product development,” the report notes.

That will ring uncomfortably true for many firms. When compliance absorbs time, budget and headcount, innovation tends to wait patiently in the corner.

PwC sets out three recommendations to help firms reduce the cost of compliance without weakening standards.

Ultimately, the answer is not to spend more on compliance, it’s to spend it better.

First, adopt a holistic approach to compliance cost optimisation. That means using an integrated framework that promotes simplification, digitisation, better data, and stronger first-line ownership of risk.

Second, embed a business-case mindset. Compliance improvements should be viewed as a way to make the business run better, not simply a way to shave costs. The focus should be on long-term efficiency, stronger culture and faster decision-making.

Third, leverage AI and technology strategically. The report suggests compliance functions are well placed to lead responsible AI adoption, particularly where unstructured data can be used without introducing high customer data risk.

This is where outsourcing starts to look like a sensible response.

At The Timebank, we support firms with suitability reviews, helping advisers deliver them efficiently and consistently. We also carry out file reviews, conduct due diligence and research on investment products and platforms and are rolling out a managed AI service designed to support compliance teams rather than replace them.

None of this is about lowering standards. High standards remain a defining feature of UK financial services, and the PwC report is clear that the UK’s regulatory framework is respected globally.

Industry leaders want to preserve that strength. They also want a simpler, more proportionate way of delivering it.

The challenge is not whether compliance matters. It clearly does. The challenge is how to meet regulatory expectations without allowing compliance costs to quietly consume innovation, growth and adviser capacity.

If even a fraction of that £33.9 billion can be redirected into better systems, better advice and better outcomes, most firms would consider that time and money well spent.

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