Regulation  

Using technology can help with regulatory compliance

This article is part of
Guide to regulation

Using technology can help with regulatory compliance

Every financial adviser has a weighty regulatory burden to comply with, and much of it has increased over the past few years.

There is now Mifid II to contend with and its reporting requirements; General Data Protection Regulation, with its demand for keeping client data up to date and secure; as well as the forthcoming Senior Managers and Certification Regime, which is forcing those in senior positions in financial services to be more accountable for what happens in their company.

And there is the ever present system under Gabriel (Gathering Better Regulatory Information Electronically), the Financial Conduct Authority’s online system for storing regulatory information where financial advisers have to submit detailed information on the recommendations they are making and the charges they are levying.

In many respects, technological reporting systems have been upgraded and are now capable of being used in many of these contexts to make life a lot easier. For example, back-office systems are not simply a way of managing client assets or recording transactions, they have become part of running an adviser’s business.

Nick Eatock, chief executive of back-office provider, Intelliflo says: “From an FCA perspective, the legal requirements of GDPR is a huge responsibility on businesses to manage their data.”

He adds that there is an impetus with Mifid II: “One of the new issues is the ongoing servicing, where there’s an ongoing advice fee, which is how most advisers offer their services.

“There should be an ongoing service in terms of Mifid II and ongoing suitability assessment, which means that advice they may have given five years ago should be reassessed to see if it is still suitable.

“This means you need to find a good way to understand if anything has changed in your client’s circumstances.”

Evolving tech

Mr Eatock says that back-office systems that advisers have been using have evolved to become key parts of adapting to this process.

Key points

  • Technology can help advisers meet regulatory requirements
  • The regulator often uses technology to help with its compliance
  • Technology can record conversations and then analyse them

He says: “Back office provides a really good way to allow your clients to ensure that their data is updated, so when things do come down the line we already have that data to make that assessment.”

The main back-office systems available can provide a white-labelled client portal, through a secure connection, that will let a customer update their details as and when they change.

This can be, for example, getting a divorce, taking on debt, or any other circumstances or life change. 

Having access to their data via a secure portal also increases engagement with their adviser, and the financial process as a whole, as they can also see the whole of their portfolio at the same time.

Systems are also able to assist advisers with their Retail Mediation Activities return submissions, which is part of the Gabriel reporting regime.

These requirements seek to make clear to the FCA what advice is going on and the result of that advice, whether it is a recommendation to purchase a product or do nothing.