• subs-bellGet the latest news! Subscribe to the ifa bulletin

RegTech to reduce adviser misconduct

The emergence of regulatory technology (RegTech) may be a solution to reducing adviser bans and penalties, and consequent industry reputation damage, that occur as a result of the compliance-saturated advice market, one policy expert and entrepreneur has predicted.

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.