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Running to stand still: compliance at a crossroads?
The majority (91%) of UK organisations in PwC’s Global Compliance Survey say compliance complexity has increased, and 49% say regulatory complexity is the biggest factor making compliance more challenging. Under budgetary pressure, compliance functions are tied up in non-value-added activities, held back by manual processes, fragmented data, and inefficiencies that increase risk and negatively impact employee morale and organisational agility.
“By harnessing technology such as AI to unlock valuable cross-functional insights, compliance can play a more strategic role as an advisor at the heart of the business reinvention needed to survive and create growth.”
Simon Perry, Risk Chief Markets Officer, PwC UK
For UK organisations, compliance is a particularly tough challenge due to the UK's complex and evolving regulatory landscape – ranging from the UK Corporate Governance Code, anti-money laundering and financial crime to operational resilience, sustainability and more. And businesses face a materially more volatile and uncertain global trading environment following the US administration’s sweeping package of import tariffs that will require more adaptable and scalable systems of compliance.
There is also the OECD’s Pillar Two tax reform, which places significantly greater emphasis on coordinated data collection and pan-global reporting. According to PwC's Global Reframing Tax Survey 2025, more than 90% of large organisations say that Pillar Two will have an impact on their business, yet less than half (43%) feel well-placed to handle regulatory change.
On top of these compliance challenges are tougher penalties and more sophisticated enforcement by regulators now using data analytics, automation tools and AI to conduct more thorough and frequent inquiries.
Reframing compliance - the imperative for change
The need to unlock growth is creating an appetite and need for bold change, with 66% of CEOs developing new business capabilities or operating models, and 32% saying their entire organisation must evolve.
There is an opportunity to take a different approach to compliance to support this need for change and reinvention. One that frees up people and resources and provides quality data to focus on the strategic priorities of the business. But it will require greater use of AI and automation, more technical and data capabilities, and revisiting operating models to close capability gaps and build capacity.
34%
of CEOs believe their business won’t be economically viable within 10 years on its current course, up from 21 % last year
Source: 28th Annual PwC UK CEO Survey
Accelerate value with automation, data and AI
Eliminating inefficient spreadsheet-based manual work with greater automation can free up resources for compliance teams to do more value-added work.
Q: To what extent does your organisation currently use, or are planning on investing in, technology and data to automate and optimise the following activities?
Taking its existing data environment and technology, we helped a global pharmaceutical company use data analytics and visualisation to deliver an ‘early warning system’ with 100% continuous coverage and near-time monitoring to predict new or changing risks. This has enabled a more proactive risk management that can flex and adapt to a dynamic landscape, as well as delivering greater productivity and cost efficiency.
From predictive analytics to classification algorithms to text-generation models, AI is also delivering a new level of insight, precision, and speed for compliance teams. More than two-thirds (68%) of UK organisations in our Global Compliance Survey say use of AI will have an overall net positive effect on their organisation and help reduce compliance risks.
Some of the AI opportunities include training large language models (LLMs) on compliance and tax-related data, enabling automated data gathering and real-time cleansing to reduce manual effort, and creating real-time horizon scanning, risk analysis, visualisation and benchmarking.
Although more than two-thirds of Global Compliance Survey respondents believe AI will have a net positive effect on their organisation, there is still understandable caution about some of the potential risks, such as bias, hallucinations, IP protection, data privacy and security. Ensuring safe and ethical adoption of AI to build trust in the technology requires the right governance processes and guardrails to understand the risks and provide assurance in line with evolving regulatory requirements and standards.
Underpinning the effective and responsible use of AI and automation is the need for organisations to standardise and join up high-quality cross-functional data. But our Global Compliance Survey highlights data reliability and quality (71%) and complexity/disaggregated data (67%) as the key challenges that will need to be overcome to achieve this.
With 23 different source systems used by its business units, a large UK bank we are working with is using AI and advanced analytics to tackle fragmented data sources that lead to inconsistent and incomplete customer data. Cloud-based technology automates discrepancy detection, using AI to identify inconsistencies in customer records and enable real-time data validation. This will ensure consistent reporting across tax regimes, reduce manual effort and enable tailored financial products and services from the single customer view and enhanced insights.
Future-proof your talent, flex your resources
Specialist risk, audit, tax and legal expertise is still essential in compliance, but many organisations are looking beyond traditional talent models to incorporate more technology, data, risk modelling, behavioural science, and strategic business experience.
Q: Over the next 12 months, which of these areas do you anticipate will have potential skills gaps within your organisation?
Two of the biggest compliance skills gaps UK organisations face in the next 12 months are in data management and analytics skills (31%), and technology capabilities (21%), according to our Global Compliance Survey.
This is echoed in our Global Reframing Tax Survey, with 95% of tax executives saying they have a skills gap in their tax function with the key gaps in AI knowledge, specialised tax expertise and data analysis.
73%
of UK organisations say they use external advisors or third-party suppliers to support their compliance activities.
Source: PwC Global Compliance Survey 2025
Our compliance survey shows the use of external advisors is also forecast to grow, and the advantages of using service providers include acquiring new skills, and having access to tech and centres of excellence to bring in additional expertise and accelerate learning. A lot of compliance is cyclical so external support also enables organisations to flex their resources and quickly scale up or down.
We are helping one client in the education sector to deliver a more streamlined and connected service between its statutory financial statement (SFS) and tax to improve accuracy and efficiency. Connecting its cross-functional tax data, we transitioned the client to a PwC model with Workiva technology and provided a cohesive team for UK and international services. This provides the client with greater visibility, creates a single and efficient process, and reduces compliance costs.
Forging a more strategic role
Highly regulated sectors such as financial services and pharmaceuticals are leading the way in creating a more strategic role for compliance — more than half (53%) of UK organisations in our Global Compliance Survey say compliance leadership has significant influence in their organisation — but less regulated sectors such as fast-moving consumer goods (FMCG) or consumer facing ones are less mature.
Q: What benefits have you seen from effective coordination of compliance activities within your organisation?
Connecting cross-functional data and increasing visibility across the organisation enables compliance to get involved earlier in new product development and market expansion, adding value by shaping business strategies. And by harnessing technology and data, horizon scanning can help compliance keep the organisation one step ahead of reporting requirements and identify value from regulatory change.
This approach could also include appointing a strategic compliance officer who sits at the centre of the organisation to provide greater consistency and alignment across all areas of compliance — finance, tax, regulatory.
“The tax function is a must-have contributor to the reinvention CEOs are seeking for their organisations to survive. Any strategic transformation, new ways of working, or new revenue streams come with tax implications.”
Jennifer Hall, Partner, PwC UK
An energy company wanted to evolve its compliance monitoring programme to overcome limited visibility into third-party risk, high costs and logistical difficulties associated with traditional on-site audits, and a fragmented and siloed monitoring process that didn’t support continuous risk oversight. The company used existing due diligence data and supply chain analytics to identify strategically important third parties and integrate the third-parties risk profile with their in-life compliance monitoring programme.
This was done using PwC technology to enable secure, streamlined interactions with third parties and integration with existing internal technology, processes and controls. Tech-focused analytics increased coverage at a lower cost, while remote, tech-enabled reviews provide a balance of efficiency and control assurance. With their judgement enhanced by technology, compliance professionals and specialists remain central to the process, which now demonstrates a strong risk-based approach and supports long-term financial and strategic objectives.
Key takeaway actions
- Centralise and align compliance activities, including coordination across first, second and third line.
- Explore technologies such as AI and automation to streamline operations and improve compliance.
- Build data readiness to maximise the effectiveness of AI and its ability to generate new insights by ensuring compliance data is high quality, structured and accessible.
- Consolidate and use data differently to help see and manage compliance risks, and to support better decision-making.
- Assess your existing compliance talent model, identify gaps and invest in upskilling programmes around areas such as AI and data science.
- Revisit your compliance operating model, including the use of external providers, to boost productivity, close capability gaps and accelerate transformation.
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Global Connected Tax Compliance Leader, PwC United Kingdom
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