Analytics, AI, Quality Assurance

The Rising Cost of Non-Compliance

CallCabinet | April 25, 2022

Today’s enterprises face the challenge of managing growth despite rising costs and growing regulations, but few price increases can compare to the cost of non-compliance.

For financial services companies, being compliant can be challenging, but non-compliance can have devastating and costly effects on virtually every regulated industry around the globe.

Avoiding Non-Compliance

One of the main reasons why non-compliance is such a growing concern for today’s enterprises is the fact that they have had to adapt to a hybrid working environment as well as increasing the amount of communications channels used to service their clients and employees . As businesses grow and reach across international boundaries, they also encounter new challenges and regulations that may require them to enhance their compliance efforts which may incur additional costs. It will also likely increase the potential liability for non-compliance.

When coupled with the fact that many of these localized regulations are also expanding, it’s easy to see how challenging it is for large-scale enterprises to keep up and avoid falling into non-compliance.

A Global Challenge for Financial Services

This is the case right now in Europe, where financial services firms are still struggling to comply with the second Markets in Financial Instruments Directive (MiFID II) that was implemented on January 3, 2018. Over the few years, fines levied by regulators for non-compliance with MiFID II have increased substantially, growing from €1.8m in 2019 to €8.4m just a year later.

MiFID II has been so challenging to European Union financial services companies that the SEC has brokered an extension for US financial services firms, putting penalties for non-compliance on hold until July 3, 2023.

To make matters worse for companies seeking to avoid non-compliance is the fact that industries like financial services will often face multiple regulations, even within a single nationality. For example, a South African financial services firm will need to comply with POPI (Protection of Personal Information Act), FAIS (the Financial Advisory and Intermediary Services Act), FICA (Financial Intelligence Centre Act), and PCI DSS (Payment Card Industry Digital Security Standards) just to do business within South Africa. If they wish to do business in the US and Europe as well, they will need to comply with the Dodd-Frank Act, GDPR (General Data Protection Regulations) and MiFID II as well.

The Scale of Non-Compliance

In part, this multiplicity of regulations can easily escalate the cost of non-compliance penalties for companies, but the larger challenge becomes one of scale. Fines for non-compliance are generally determined by the size of the transgression, with larger enterprises facing larger fines.

Right now, the average cost for an organization experiencing non-compliance is over $14 million, but penalties can go much higher. JPMorgan was recently fined $200 million for communications breaches, and Swiss bank UBS was able to reduce to €3.75 million what was originally a fine of €3.7 billion ordered in 2019.

More and more, these hefty fines are becoming commonplace, forcing companies to take a more proactive approach toward avoiding non-compliance.

The True Cost of Non-Compliance

However, the real costs of compliance failures can far exceed the financial fines imposed by regulators. Non-compliance can badly damage a firm’s reputation and actually limit its ability to conduct business.

If you consider regulations to be a form of imposed transparency for businesses, it becomes clear that consumer protection is their primary goal. Regulations allow consumers to see how companies work for them. And in an era of increasing transparency, it is also helping inform consumer choices. Consumers expect the companies they do business with to protect them as much as possible. When enterprises fail to do so due to non-compliance, they not only violate industry regulations but consumer trust as well.

While the reputational damage of non-compliance can be devastating for a company’s customer base, it can be even more damaging for their partnership ecosystem. For example, a financial services company that fails to be PCI DSS compliant can find itself unable to do business with banks or other creditors, likely putting the company out of business entirely.

Compliant Call Recording for Clients and Employees

Cloud-based call recording comes with features not available previous to cloud computing. Processing power for speech analytics took a monumental leap forward in the advent of the cloud. Not only are PCI numbers detectable they’re also automatically redactable.

For these reasons, it is imperative for businesses to take compliance seriously, even if it means making significant investments or restructuring business practices in order to do so.

Customer data also becomes a strategic asset by revealing insights about your customer base and the compliance readiness of your employees. CallCabinet’s AI-driven voice analytics supplies critical QA automation with keyword and key phrase analysis, call transcriptions and sentiment analysis. Agent evaluation and screen recording deliver a positive impact on the customer experience by providing a complete view of your customer service operation.

To learn more about protecting your business and ensuring compliance, reach out to us today at


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