“Things get done only if the data we gather can inform and inspire those in a position to make [a] difference.”
— Mike Schmoker
Time to mine and refine
While institutional licensees withered under increased (and increasing) regulatory and stakeholder expectations, others looked forward and others looked forward and anticipated how advice businesses need to evolve to prosper in the new regulatory regime.
They may have very different visions of the future, but almost all of them recognised that their ongoing sustainability is explicitly tied to effective data security and management – Data is the new oil.
This realisation is in our DNA. Everything we do is designed to free you from the burden of compliance and equip you with the data and insight to transform obligations into opportunities.
We’re compliance nerds, so it probably doesn’t surprise you to learn that we think about regulation and technology (a lot). We focused on advice quality, transparency and substantive compliance long before the ‘lawyers’ revised their ultra-conservative positions on 912A.
Our focus has always been on equipping our clients to optimise their existing compliance obligations, anticipating change and ‘future proofing’ their businesses.
We believe that the right technology, properly deployed, is the key to sustainability.
You’re grappling with significant change so we want to highlight how a well-designed regtech solution – like OpenAFSL – can help you thrive.
Recognising, and reporting, systemic issues
“Firms should analyse complaint data regularly so that they can:
(a) monitor the performance of the IDR process;
(b) identify possible systemic issues and areas where product or service delivery improvements are required; and
(c) identify matters that are likely to need to be reported to ASIC under s912D of the Corporations Act.”
— ASIC RG 271 “Internal dispute resolution”
Over the last six months we’ve transformed OpenAFSL. with the aim of improving the quality of the data available to the Licensees.
The new iteration is much more visually engaging, but refines our innovative approach to monitoring and supervision by incorporating additional behavioural nudges made and applying more weight to construal elements (environmental and structural considerations).
Better still, the granularity and inter-connectivity means that neither the new Complaints Regime nor the new Breaches Regime will require you to make any change. Instead, OpenAFSL will highlight and collate the data that’s subject to new regulatory requirements.
So your compliance with changed, and changing, requirements is ensured by intelligent design rather than reaction and forced evolution.
If you’re uncertain why you need to be interested in retaining data and identifying systemic issues, you should take the time to consider ASIC’s expectations.
Data + Insight
We have, at last count, reviewed over 11,000 client files using a consistent, qualitative and risk-based advice assurance process.
Although our clients benefit from our insight, we thought that now is an appropriate time to share what we see – what compliance issues commonly appear and how they can be recognised.
Clearly, we’re much more granular (and capable of providing more specificity) but here’s our view of advice in 2020.
The larger the sector, the greater the number of issues identified.
What might surprise you is while “advice process” issues represent over 20% of identified compliance issues, it’s qualitative elements (and adviser’s success in operationalising compliance obligations) that simply don’t accord with an industry that prioritises relationships and understanding over process.
Also, 2020 was the first year that the FASEA Standards formed part of our review process and the data suggests that advisers also struggle to demonstrate compliance with these requirements (and it’s not just Standard 3).
These results vary according to the Licensee, State, experience and advice focus (as well as subject and scope).
We can talk you through the subtleties, variations and inconsistencies (in the context of training, breach, remediation and complaint data).
In our view, Licensees will be increasingly expected to be able to do the same – so take this opportunity to either review your current capabilities or talk to us about how we can help you.
We’ll continue to identify and manage preferences (ethics and conduct), but we’ll do it in a way that is even more intuitive and even more practical.
Unlike the mechanistic process routinely followed by most Licensees, OpenAFSL focuses on the client experience and creates a formal demarcation between formal and substantive compliance issues; our users are therefore better placed to consider matters in context and therefore better differentiate between intent, process and outcome.
Analytics and reporting
“System under investment has increased exposures. We know this from seeing it first-hand in our onsite supervisory work on internal dispute resolution processes and breach reporting. Here, metrics tell a powerful story. ”
— Regulation for recovery: when pilots become enduring practice A speech by Deputy Chair Karen Chester, to the AFR Business Summit 2021, Wednesday 10 March 2021.
- The Advice Assurance Report has been redesigned to streamline content and highlight key take-outs. You can also choose to group observations by file instead of grouping them by issue. You can even do both or vary your approach according to the recipient’s preferences and learning style.
- To help advisers improve their advice processes, or increase the quality of their advice, each report contains suggested steps the adviser can take to improve their results.
- The standard report now includes trend analysis and a comparison to the industry standard derived from our sample of over 11,000 files reviewed. The mean (adviser and licensee level) is updated every quarter to reflect the current environment.
- To assist advisers contextualise their results, their report will now identify whether they sit in the top 40% of advisers, the top 30%, the top 20%, the top 10% or the top 5% of our sample.
- If you’re interested in understanding your top issues, or the most common issues in a particular period, you can now generate these reports even more easily. We’ll also now highlight the total number of observations made grouped by consequence and impact.
- If you’re demonstrating behaviours and practices that exceed legal requirements and industry standards, these will be prominently highlighted in the report as a congratulatory note to the adviser.
- Explore your data from the top-down, from bottom-up or sideways.
- The “McGuren Insistence” has been removed from adviser reports so they’ll focus on the issues and not their score.
Catalysts, complaints and conflicts
- The new UI makes it even easier to identify the cause and origin of the issues to be remediated. In the new iteration, you’ll be able to separate root causes from direct consequences and remediate them differently.
- We’re recognising ‘catalysts’ in the new system – which should provide our clients with new perspectives of their conduct and regulatory risks.
- Remediation actions can be sent to advisers directly and, as they execute the required steps, OpenAFSL will record, highlight and escalate their activity.
- Separate issues – with the same remediation action – can be grouped and processed as a single item. Better yet, if a single group item is incomplete, it can be easily separated from the group and the remained closed.
- We now differentiate between “licensee issues” and “adviser issues” . If a compliance incident, identified during the advice assurance review, was caused because the adviser relied on the Licensee’s direction or systems. We’ll note it in the review for the adviser to address but attribute the failure to the Licensee in the aggregated report.
- The complaints module has distinct stages that record primary sources, related matters, outcomes and similar issues. The consideration of ‘similar issues’ isn’t limited to complaints but includes breaches, operational risk reports and coaching notes.
Instruction, advice and coaching
There are a number of changes made by the 2.27 iteration of OpenAFSL.
- The FASEA Standards have been organically integrated into the review methodology to streamline the review process and improve granularity.
- The analytics associated with reviews, training and mentoring have been revised and redesigned for impact and effectiveness.
- Deliver (and record at) interactions at either a Business or Adviser level. So debriefs, education and ad hoc interactions can be effectively recorded, managed and reported.
- In anticipation of the new Reference Checking requirements, recruiting and appointment steps have been coded into OpenAFSL to operationalise these requirements. Documents can be updated and validated before the prospect can be appointed.
- Provisional Advisers, and the details of their supervision, can be managed through OpenAFSL.
- The compliance manual has been integrated into OpenAFSL – which means it can be referenced in the reviews, allocated in remediation and linked to the registers and policies you’ve uploaded.
If you exclude the advice review module from your system, you can obtain access to a reg-tech platform built by, and supported by, compliance experts.
For a relatively low licensing fee (based on user numbers) you’ll secure the data, systems, training and support the Regulators expect you already have.
Pricing is flexible and customised to your needs. From as little as $240 per user per month you can access a compliance platform that can free you from the burden of compliance.
Contact me if you have any questions or want to arrange a demonstration.