Over one in three financial services firms (36%) have been penalised at least once in the past 12 months for failing to meet regulatory requirements, according to a new report.

Regulatory compliance was one of the biggest challenges faced by financial services firms surveyed by consultancy Consulting at Davies in May.

Over three in five (62%) of those surveyed said it has become more difficult to keep up with regulatory compliance requirements over the past five years.

The FCA's Consumer Duty had led to changes in process at most firms, with 63% of those surveyed saying it has led to changes in the way they communicate with their customers.

Silvia Amoros, co-lead of the banking and markets EMEA team at Davies, said: “The regulatory compliance landscape is constantly evolving, and our research shows just how many businesses in the UK’s financial services industry are struggling to keep pace with the changes taking place.

"Failure to do so is not only likely to incur significant penalties, but can also bring huge damage to a company’s reputation.”

Separate research from Royal London found that over two in five advisers (43%) changed their client servicing approach as a direct result of the FCA's Consumer Duty introduced in July last year. 

• For the Consulting at Davies research Censuswide interviewed decision makers from 501 financial services firms in the UK between 13 and 21 May.