Plans for an automated compliance process that guards against mis-selling have reopened the debate over whether regulatory technology can help solve the advice industry’s suitability issues.
Money Concierge, primarily a technology company with an advice arm, told FTAdviser it is intending to develop a remote advice process based on a compliance system designed to ensure an adviser “can’t go wrong”.
Peter Deane, chief operating officer, said: “Through real-time compliance oversight of the advice process, we are aiming to reduce the incidence of mis-selling.
“[The technology would] lay out guidelines and paths that allow the adviser to move fluidly through the advice process, while picking up key pieces of language used... to create clear and definitive decisions with the customer.”
Money Concierge said the ‘regtech’ will take approximately 15 months to build. The system is currently in the fundraising stage.
Simon Bussy, director at Altus Consulting, said it was “encouraging” to see businesses pushing the boundaries to improve the quality of advice for the consumer.
“Any system that can help give advice, and also clearly explain why it made the choices and decisions it did, is exciting,” he said.
“[The use of this] in financial services is relatively new, and it will be fascinating to see how the team develop their technology.”
The Financial Conduct Authority has taken a more stringent tone on advice suitability this year, saying in January that pensions failings in particular meant suitability issues were causing “significant” harm to consumers.
The Covid-19 crisis saw the regulator subsequently postpone a planned review of the suitability of retirement advice until 2021.
Mike Barrett, director at the Lang Cat, agreed systems such as Money Concierge’s could help companies ensure they have tighter controls in place to prevent bad advice.
He said: “One area these sort of systems can help is by implementing ‘red, amber, green’ statuses for critical elements of the advice process.
“By setting these parameters – for example green cases are straight through, amber off to file-checking and red is rejected – firms can ensure they have strong systems within their business.”
Keith Richards, chief executive of the Personal Finance Society, said: “We should welcome solutions designed to achieve good consumer outcomes and the protection of vulnerable consumers.”
He noted that leaving a clear audit trail through recording/time stamping could “very well ease the burden on compliance”, when compared with a reviewer subsequently assessing a file with no concept of the client interaction.
Mr Richards added: “The objective to make advice ‘efficient and engaging’ is surely a positive step in the right direction, especially for new audiences.”
Mr Deane said that the introduction of new technologies could “only be good” for the overall advice market.
He added of the company’s own planned compliance system: “The process will be fully auditable, with recordings and reports that are effectively mirror images of each other. This would include the ability to match text, visuals and spoken words.”