Cut regulatory reporting cost by 80%

The bill has quietly doubled, and most of it is avoidable

In 2024 the Financial Conduct Authority handed out £176m in fines, up roughly 230 percent on the £53.4m it imposed in 2023, and a large share of that escalation was tied to transaction reporting and market integrity failures (SteelEye Fine Tracker 2024). That same year, Deloitte estimated that compliance operating costs at retail and corporate banks had risen more than 60 percent compared with pre-financial crisis levels, and banks were now spending roughly 13.4 percent of their IT budget on compliance activities, up from 9.6 percent in 2016 (Deloitte, Hyland). For mid-cap asset managers, regulatory reporting now routinely consumes 4 to 6 percent of the operating budget while producing almost nothing the business itself can use. That does not have to be the ratio. The work is automatable, the technology is mature, and the payback period is measured in months.

Where the time and money actually goes

We recently audited the regulatory reporting workflow at a mid-cap UK asset manager. The findings were not unusual.

The firm employed seven full-time staff dedicated to regulatory reporting across MiFID II, AIFMD, SFDR and internal compliance. They used a vendor reporting tool that cost roughly £180,000 a year. They pulled from three data sources that did not agree with each other and had to be manually reconciled before each submission. Each major report took two weeks of preparation, two weeks of internal review, and a further week of fixing errors flagged by the regulator after submission.

The annual cost of this entire workflow, including salaries, software, and the opportunity cost of the team not doing anything else, was somewhere north of £900,000. For one mid-cap firm. The output was used by precisely one stakeholder, the regulator, and informed precisely zero internal decisions.

This is the hidden cost of regulatory reporting. Not the line item on the budget. The full cost of dragging seven smart people away from anything else they could be doing, twelve months a year, to produce reports that nobody else reads. It is also what puts firms one staff absence or one spreadsheet error away from a Final Notice. The FCA's first ever MiFIR transaction reporting fine, issued to Infinox Capital in February 2025 for £99,200, stemmed from 46,053 unreported transactions tied to a single desk where nobody had clear ownership of the reporting logic (FCA, Clifford Chance). Market Watch 81, published in November 2024, set out the recurring pattern: weak change management, reconciliation run on an irregular basis and only on selected fields, governance dependent on individual staff, and reporting logic developed in isolation from the underlying business (FCA Market Watch 81).

Where the 80 percent comes from

The 80 percent reduction is not magical. It is the result of automating four specific things that everyone says cannot be automated.

Data reconciliation. Most regulatory reporting time is spent reconciling positions across systems that should agree but do not. The FCA itself called out, in Market Watch 81, that reconciliations run on specific fields only or on an irregular basis fail to identify errors in transaction reports. This is a tractable engineering problem. A few weeks of work to write reconciliation logic against the underlying systems removes 30 percent of the manual work permanently and closes the single biggest driver of regulatory findings.

Report generation. Once the data is clean, the actual report is a deterministic transformation. It can be generated by code, in seconds, instead of by a human in a spreadsheet over three days. Another 25 percent. For AIFMD Annex IV alone, 74 percent of fund managers surveyed by the Hedge Fund Journal said regulatory reporting would incur the greatest one-off and ongoing costs of the entire directive. Most of that spend is on repeatable mechanical work.

Validation. The errors that the regulator flags after submission are usually predictable. They follow patterns. A validation layer that checks for those patterns before submission catches the vast majority of them, removing the post-submission fix cycle. Another 15 percent. This is also what protects the firm from the kind of latent error that accumulates over years and turns into a seven-figure fine.

Submission. Most regulatory portals have APIs. They are badly documented and unpleasant to work with, but they exist. Submitting via API is faster, more reliable, and produces an audit trail that you cannot fake. Another 10 percent.

Add it up and you get to roughly 80 percent of the original effort removed, leaving the team free to do other things. The remaining 20 percent is the genuinely judgemental work that needs a human: handling edge cases, responding to regulator queries, interpreting new rules.

What stops people doing this

Nothing technical. The global RegTech market was valued at roughly USD 18.6 to 19.2 billion in 2025 and is forecast to grow to around USD 22.3 billion in 2026, with cloud-based deployments holding about 75 percent share and risk and compliance management capturing 34 percent of the segment (Precedence Research, IMARC). Asset managers with over USD 1bn AUM typically spend USD 5 to 15 million a year on regulatory technology already. The tooling exists. The patterns are known.

The reason most asset managers have not done it is organisational. The regulatory reporting team does not have an engineering budget. The engineering team is busy with revenue-generating projects. Nobody has connected the two and said "if you spent six engineers for three months you would save eight people permanently and cut your enforcement risk in half". The 14th annual Thomson Reuters Cost of Compliance survey, now run with CUBE across more than 2,000 senior compliance leaders in 12 markets, continues to find that skilled staff shortages and rising costs are the two biggest worries in compliance. Automation is the answer to both and the firms that move first on it tend to reallocate the freed-up headcount into the judgemental work that actually reduces regulatory risk.

This is the kind of unglamorous, high-ROI engineering work that we do a lot of. It rarely makes the front page of the trade press. It pays for itself in months and frees up genuinely skilled people to do more interesting work.

The hidden cost of regulatory reporting and how to cut it by 80%

The bill has quietly doubled, and most of it is avoidable

Where the time and money actually goes

Where the 80 percent comes from

What stops people doing this

Sources

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