Detection of Contradictions and Inconsistencies in Regulatory Documents using Prompt-Engineering

Companies create regulatory documents, such as policies, standards, and guidelines, to define their processes and structures. Frequent updates to these documents can lead to inconsistencies and contradictions between the respective regulations, which can result in errors, delays, asset compromise, or enabling fraud and non-compliance. Given the variety of document types and their thematic, structural, lexical, syntactic, and domain-specific differences, automated conflict detection remains a challenge, especially due to the lack of annotated data from practice. As an alternative to supervised approaches, this paper investigates whether a prompt-based classifier can detect contradictions and inconsistencies between regulatory texts and what level of accuracy can be achieved. The evaluation of three prompt variants and seven large language models on a real-world regulatory dataset shows that the detection accuracy of a prompt-based classifier (F1- score of 0.851), which includes 26 detailed formulated rules, is only 1.29% lower than that of a supervised model (F1-score of 0.862) trained with annotated data.