A recent global study by CSC highlights that 34% of private market professionals wait until the last minute to plan for new regulations, struggling with the rapid pace and complexity of regulatory changes. The study, involving 400 senior executives in private equity, private debt, real estate, and infrastructure across Europe, the US, and Asia Pacific, shows significant regional differences and challenges in regulatory compliance.
A recent global study by CSC has found that over a third of private market professionals admit to delaying their regulatory planning until the last minute. This highlights the increasing difficulty of keeping up with fast-changing and complex regulations. The study, which surveyed 400 senior executives from Europe, the U.S., and Asia Pacific, reveals the major challenges in managing Special Purpose Vehicles (SPVs) amidst these evolving rules.
The study also highlights regional disparities in regulatory preparedness. North America lags, with 42% of professionals delaying planning until just before regulations are implemented. In contrast, Asia-Pacific shows greater readiness, with 66% proactively planning for regulatory changes well in advance.
Regional discrepancies in regulatory planning
The study, commissioned by CSC, highlights that 34% of private market professionals delay their regulatory planning until just before new regulations take effect. This issue is most prevalent in North America, where 42% of respondents admitted to last-minute preparations. In contrast, Asia-Pacific stands out as the most prepared region, with 66% of professionals proactively planning for regulatory changes well in advance.
The research sheds light on the difficulties faced by professionals in managing special purpose vehicles (SPVs) amidst changing regulations. Overall, 69% of respondents reported that adapting to regulatory changes for SPVs has become increasingly challenging.
“Regulations continue to develop around the world and remain both a head- and tailwind for many managers, particularly as they become more and more complex,” says Thijs van Ingen, Global Market Leader of Corporate and Legal Solutions at CSC.
Challenges with regulatory compliance
Key regulations such as DAC6, FATCA, and CRS are particularly difficult for private market professionals to manage. Almost two-thirds of those surveyed found it challenging to handle these regulations in the administration of SPVs. Other significant challenges include Ultimate Beneficial Ownership (UBO) registration and filings, affecting 58% of respondents.
Delphine Jones, Managing Director of Client Solutions at CSC, highlights the complexities of adapting to new elements like UBO registers.
“Dealing with regulation can be challenging, and the world is rapidly changing. For example, UBO registers are a new element to consider in Europe and other jurisdictions, such as the U.S. There are notable differences across markets, such as a variety of changing filing deadlines, which adds to the difficulty of adhering to these regulations.”
Staffing issues and outsourcing solutions
Another major challenge identified is the shortage of qualified staff. Nearly 71% of respondents indicated that finding suitably skilled personnel for setting up and running SPVs has become a significant issue. The competitive market for legal and compliance experts complicates this problem further.
“Finding suitable staff, for example, those in legal and compliance, is getting much tougher due to the market being incredibly competitive,” says van Ingen.
The study suggests that outsourcing the management of SPVs to specialists can provide a solution.
“In a world of sophisticated regulation, outsourcing the management and administration of SPVs to specialists can mean sponsors stay current with all regulatory developments and reporting requirements across jurisdictions,” adds Jones.
This approach can help organisations stay current with regulatory developments and simplify compliance efforts.
About CSC
CSC is a global leader in business administration and compliance solutions. Trusted by over 90% of the Fortune 500®, 90% of the 100 Best Global Brands, and more than 70% of the PEI 300, CSC offers specialised services across various sectors. With over 125 years of experience, CSC operates in more than 140 jurisdictions worldwide, providing expert support to businesses navigating complex regulatory environments.
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