The cost of buying compliance support one project at a time is often higher than it looks. This is how many FCA-regulated firms end up buying it. Something happens: a regulatory change, an FCA information request, a new product, or an investor query. A scope is requested. A proposal is drafted, reviewed, negotiated and signed. Work begins, the matter is dealt with, and the file closes. Then the next issue appears, and the cycle starts again.
Each individual engagement may be sound and well delivered. The problem is the model. It carries costs that rarely show up on an invoice, but are felt across the business.
THE FOUR HIDDEN COSTS.
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THE FOUR HIDDEN COSTS OF PROJECT-BY-PROJECT COMPLIANCE
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What looks like controlled spend can quietly create budget pressure, delay, lost context and unmanaged risk.
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1. Budget shock
The need for compliance is continuous at its base and unpredictable at its peaks. When it is bought project by project, that unpredictability lands directly on the P&L. January’s budget can be out of date by March.
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2. Deadlines do not wait
A change-in-control notification, FCA query, or Consumer Duty board report arrives with the clock already running. Scoping, pricing and negotiation can consume days or weeks before work begins.
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3. Knowledge keeps leaving
Every discrete engagement starts with the same tax: briefing an adviser on the firm, its permissions, history and people. The context built during one project often disappears when the project ends.
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4. Gaps between projects
Between engagements, no external adviser is consistently watching. Monitoring can drift, horizon scanning may be sporadic, and small issues can compound quietly.
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A MISALIGNED RELATIONSHIP.
There is a fifth cost, and it is harder to quantify: the relationship the model creates. When every conversation might lead to another scope, firms can become reluctant to pick up the phone. A question that a retained adviser could answer in ten minutes becomes an email that never gets sent, and a risk that is never raised. The provider is paid when problems need fixing, while the firm is better off when issues are prevented. That misalignment is not usually intentional. It is built into the billing model.
THE SHAPE OF THE ACTUAL NEED.
A regulated firm’s compliance year is rarely project-shaped. There is a continuous baseline of monitoring, training, notifications and regulatory change management. Around that baseline come the spikes nobody scheduled: a change in control, an additional FCA notification, an information request, or a product launch that touches the perimeter. A buying model built around discrete projects does not fit the baseline or the spikes particularly well.
The conclusion is uncomfortable but useful. For many firms, the issue is not the quality of their compliance support. It is the way they buy it. The next article in this series looks at the alternative: compliance support structured as an operating partnership, not a sequence of separate transactions.
INTRODUCING OUR COMPLIANCE OPERATING PARTNER PRODUCT.
Backed by our proprietary Compliance Operating System, MyCosegic, our Compliance Operating Partner product offering is aimed at marrying ongoing and less predictable compliance obligations, covering regulatory, financial crime and prudential/regulatory reporting compliance under one offering.
SPEAK TO THE COSEGIC TEAM.
If you recognise these costs in your own firm, it may be time to look at a different way of buying compliance support. Our Compliance Operating Partner brings monitoring, training, regulatory notifications, financial crime and prudential expertise together in one retained relationship, backed by MyCosegic and a single predictable annual fee. Book a conversation with the Cosegic team to see what it could look like for your firm.
