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Rules cannot keep pace with developments and emerging initiatives. The
time taken to formulate and implement new rules means that there can be a
substantial time lag before the regulatory framework catches up with events.
This may be a significant disadvantage to firms wishing to take advantage of
new developments.
It can result in a ‘tick-box’ approach to compliance, focusing on the letter and not
the spirit of the rules.
The rulebook simply cannot cover every circumstance or eventuality, leaving
gaps that could potentially be exploited
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