December Update: Refinement, Reporting and Reviews

the story so far

Long-time readers will know that Assured Support's reg-tech platform, OpenAFSL, is an innovative and complete compliance solution that provides users with the data and insights they need to identify, consolidate, manage and monitor risks.

Better yet, it provides a complete compliance, governance and risk management system that adapts to their business (not the other way around).

Reiterated, refined and improved since 2003, openAFSL is an effective, granular and conduct based licensee compliance platform that pre-dated the emergence of 'reg-tech'.

Building twenty years of deep understanding and diverse experience into an IP rich web-app, our platform provides:

  • Industry leading adviser audit capabilities (including reporting and benchmarking);

  • Embedded advice metrics and trend analysis;

  • Automated workflows, surveys and checks;

  • Streamlined reporting and granular analytics;

  • Integrated remediation and consequence management;

  • A cost effective and configurable regulatory solution;

  • Consistent complaint, incident and breach management; and

  • Centralised repository for all reports, reviews, processes, policies and key data.

Unlike some purported reg-tech solutions, OpenAFSL focuses as much attention on construals as dispositions to identify behaviours, conduct and contexts.

“Financial supervision is increasingly driven by data, with regulators requiring data of greater granularity and at a greater frequency” - Institute of International Finance, March 2016 “Regtech in Financial Services: Technology solutions for compliance and reporting”.

The granular and benchmarking data we've complied has helped our clients improve and made the system better with each iteration.

Adapting to new technology and new options has enabled the platform to stay ahed of the industry and to anticipate regulatory and legal reform.

Better yet, our data shows we are effective in changing conduct not just identifying it.

With integrated remediation and clear reporting, we've eliminated the low value and time consuming tasks that prevented compliance from being recognised as a strategic management discipline.

OpenAFSL is a conduct and risk-based reg-tech platform that will free you from the burden of compliance.


Anticipation pays dividends

We changed our review methodology in early 2018, but most changes were relatively minor. For example, we changed the colour of 'sound' files from blue to purple in response to a complaint from a single client.

In retrospect, we probably should have consulted more widely to properly assess 'adviser sentiment'. Lesson learned.

We also tweaked the algorithm and some aspects of the scoring methodology. 

Our apprehension last year (subsequently validated by both McDonald v AMP and the Banking RC) was that most compliance reviews were not correctly identifying and prioritising compliance risks and ASIC would soon wake up to these deficiencies.

The ABC rating scale used by some systems is the most obvious weakness, but reviewers’ unwillingness to make tough calls (and management's unwillingness to heed them) are equally problematic. 

We made a series of UI changes to better highlight how granular, prioritised and interdependent risks were presented. We made these changes to help our users stay ahead of regulatory expectations.

These changes didn’t require a fundamental shift in our approach (we've always identified, managed and remediated any relevant issues) but we repositioned 'compliant' advice as reflecting nothing more than advice that complies with the law.

Good advice, in contrast, is advice that exceeds these minimum legal requirements.

In real terms, while there's been no material change to our approach, we have had to spend more time than we expected explaining that the 0-10 risk range is not a simple linear progression. 

Getting a "5" doesn't mean that 50% of the industry are better than you. It simply means that you are consistently meeting legal requirements (but not consistently exceeding them).

Resetting client expectations following the reporting change has required us to make more of an effort to explain it, but most users understand the need for the change in a challenging regulatory environment. Moving from an "8" to a "5" might not seem like a big change, but it is when it's not properly explained or understood.

(Technically, the review scoring algorithm was adjusted to provide a larger range when determining soundness’ and the threshold scoring calculation was updated to avoid reliance on averages.)

The ‘secret’ to getting high scores is simply to consistently exceed 'compliance requirements'.

For some ideas of how to improve review results please refer to our article on the topic.

Even though we anticipate more regulatory intervention in 2019, we do not believe any further algorithmic refinements are necessary.


the immediate future

That's not to say that you won't see some significant enhancements in 2019.

We've recently introduced 'coaching tips' and 'acknowledgements' in the process that enables the reviewers to identify minor issues and provide explicit encouragement or a process improvement.

The Reviewers' use of this feature provides more granulation and more differentiation between grouped reviews (which in turn assists performance and remuneration management). 

Also, even when no compliance issues are identified, we'll supplement the positive acknowledgement with 3-5 specific recommendations on how the adviser can improve their process (and their result).

We've traditionally left that to the Licensees to do, but the initial response to this initiative has been very positive so we're rolling it out to our users in 2019.

We also want to provide our clients with an easier way to identify recurring issues over time.

We think this will be an incredibly useful function to help Users to identify whether their remediation, governance and training frameworks are effective.


Reporting

To create more effective reporting, we are constantly developing our system to ensure that our clients can access the data with the information needed.

Here are some of the updates:

  • Implementation of filtering options based on the selected dates in the Adviser Tracking Report.

  • Ability to generate the Adviser Tracking Report to include the number of finalised, scheduled and total review per adviser.

  • The Analyst Observation Report has been improved to display the review question number, details and the scoring. Furthermore, you can now generate the report including all the selected observations per analyst.


Review

Assurance Review is the critical part of the compliance monitoring and supervision and we want to make sure that our clients feel satisfied that openAFSL can simplify the process and capturing all the information needed to provide qualitative assessment of advice.

  • The client file UI has been redesigned. It now clearly presents the advice timeline created by the documents provided and the adviser’s actions.

  • You now have ability to link an existing client with previous records to view the client’s previous and current circumstances.

  • To streamline the review process, you can now review multiple advice documents for a client and capture each document’s specific details.

  • The Assurance Review Report will now clearly link the referenced advice document to the identified issue.

  • A date range can now be specified in the Risk and Governance Review.

  • We have created thumbs up and down into each review question to create an ability to provide more support, training and/or recognise the good work for the adviser.


 If you want to hear more about our exciting improvements or learn more about openAFSL, please fill out the contact form or email Kye direction (kye@assuredsupport.com.au)