Automated Regulatory Compliance Question Answering in Financial Services with Domain-Adapted Retrieval-Augmented Generation
On the map: Retrieval-augmented generation → Legal and financial RAG
Abstract (arXiv)
Financial institutions operate under dense, frequently amended rulebooks, and answering a compliance question correctly requires not only fluency but verifiable grounding in the authoritative text. Large language models are attractive for this task, yet the models that firms can realistically deploy on-premise are compact ones, and compact models hallucinate obligations. We study whether a carefully domain-adapted retrieval-augmented generation pipeline closes that gap. Our retriever is built in three stages on top of LegalBERT: entailment tuning that recasts question--passage matching as premise--hypothesis reconstruction, contrastive tuning with in-batch negatives, and score-level fusion with BM25. Our generator is a compact model (2B--12B parameters) served under 4-bit quantization, either prompted or adapted with retrieval-aware fine-tuning (RAFT) through LoRA. On ObliQA, a question-answering benchmark built from the Abu Dhabi Global Market rulebooks, the staged retriever raises Recall@10 from 0.256 to 0.774 and outperforms BM25 (0.678) and E5-large-v2 (0.758), the strongest general-purpose dense encoder we tested. RAFT-LoRA then improves the composite RePASs answer-quality score for every model we could adapt, with the largest gain on the weakest one. However, the adapted models do not transfer to Australian case-law questions, and a closed-book model that receives no passages at all scores within 0.011 RePASs of the full pipeline while producing answers that cite nothing and misstate obligations. The retrieval gain is therefore measured directly, the generation gain is a gain in RePASs rather than demonstrated grounding, and grounding itself requires an evaluation protocol that RePASs does not provide.
Key facts. No citing papers in the map yet (data through 7 Oct 2026). Placed in Legal and financial RAG, one of 15 directions in Retrieval-augmented generation. Builds on 41 of its 59 references that are in the map. First posted on arXiv 24 Sep 2026.
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- 2024CBR-RAG: Case-Based Reasoning for Retrieval Augmented Generation in LLMs for Legal Question Answering4 Apr
- 2023Interpretable Long-Form Legal Question Answering with Retrieval-Augmented Large Language Models29 Sep
Other references · 38
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