Speaking on the latest episode of The ifa Show podcast, former AFA policy chief and co-founder of Advice RegTech Samantha Clarke said RegTech tools will play a major role in preventing adviser bannings and follow-on industry reputational damage by dramatically reducing compliance burdens.
Discussing the attitudes of advisers and licensees towards RegTech, Ms Clarke said, “What I’m hearing from my research with licensees and advisers – particularly the directors and senior members at licensees – is that they don’t want any more advisers banned on the front pages of the papers. It’s not good for advisers, It’s not good for the reputation of the industry, It’s not good for the licensees being named and shamed as a result of these bannings and investigations – so any tool that can help to improve that outcome for them is welcome – that’s what I’m hearing.
“Imagine licensees having the ability to have a dashboard that allows them to see where there is quality advice being produced in their networks and where there’s not.
“RegTech will improve the automation and the span of oversight – predictive analytics and technology can enable where quality human oversight should be focused in a proactive way rather than trying to cover all bases.”
Ms Clarke pointed to the publication of the ASIC Report 515 regarding advice audits, reference checking and breach reporting from the large five licensees. Ms Clarke said $3 billion has been wasted on compliance in the industry.
“[The report] had some really concerning results around oversight,” Ms Clarke said.
“Despite $3 billion being spent on regulatory compliance across seven reforms over the last few years, the results show that only 18 per cent of the advice audits were effective amongst the large licensees.
“With all the money that’s been spent by those licensee trying to get it right, the results are not right. We need to look at things differently and in new and different ways as an industry.”
Ms Clarke said RegTech will drive a more contemporary use of compliance at both the licensee and adviser level.
“I envision something much like when you buy your cereal at the supermarket and you see the heart tick of approval for a healthy cereal. Statements of advice in the future will be more contemporary so that when advice is provided to consumers it comes with a best interest duty tick of approval.
SOAs should also evolve to move away from paper form and incorporate videos and other formats that actually make it easy for clients to understand and engage, Ms Clarke said.
For the industry’s reputation to begin healing, it needs something incredible, like the creation of a compensation fund of last resort to address the consequences of bad advice and not just for future clients but for past and existing clients who are still suffering the significant impact of what that advice has cost them, could be their homes or their super, their marriages or the lifestyles of their children. However, being the optimist that I am, and seeing first hand the continuation of bad advice that still occurs and doesn’t get on news headlines, I think the intention and spirit of what RegTech suggests can definitely bring about a positive change in an industry where the united objective should be to improve the financial situations of the Australian people.
I second that. Our mission (our why we exist) should be to “improve the financial situations of all Australians”. We should also have to take an oath like doctors, to [b]do no harm[/b] as part of being admitted to practice. It is only with this mission and motto we can overcome the serious impediments we face, make reparations & earn the trust of the community we serve. There are many amongst us, working tirelessly to attain that objective already.
too late for the industry, it’s reputation is permanently tarnished and irreparable. I urge everyone to look at the monthly magazine Acuity (from CA ANZ) and turn to the back of it. Each month there is at least a dozen (last month I counted 13) or more accountants being disciplined for amongst others, using client’s money inappropriately, bankruptcy etc etc yet, we would never hear about this as all accountants are deemed saints (and enjoy their reputation as such). Yet, in our industry even the smallest of failings of an adviser is headline news thanks to ASIC and others. Until this changes, and we admonish doing the wrong things quietly (like all other professions do) the reputation of the industry will remain as it is, Atrocious