A consultant estimates the price tag for remediation of issues identified from the Hayne royal commission to top $2 billion.
However, QMV believed most of the cost could have been avoided if data protocols had been better maintained.
QMV managing director Mark Vaughan said many organisations will now pay the price for not having implemented adequate data management tools and processes.
He said it is important for all financial institutions – not just the big four banks and AMP – to be on the front foot when it comes to the data they hold on members and clients.
“Regardless of the final numbers, there is no doubt that data errors are costly for institutions in many respects – from remediation expenditure, to compensation payments, not to mention reputational damage – and the longer a data quality error goes undetected, the greater the ultimate harm to bottom lines for institutions and members,” Mr Vaughan said.
“The exponential harm that the proliferation of data errors can cause is a ‘disease effect’. If data quality issues are not detected and remedied soon after they occur, there is a tendency for the error to spread and contaminate other data, even jumping to other systems.”
Mr Vaughan added that the focus on data quality post royal commission should be on prevention, detection and correction, in that order.
For this to occur, he noted there needs to be a turnaround in the corporate attitude to data quality.
“Across the industry there has been an attitude that it is ‘OK’ to wait for a problem to occur and then fix it, rather than take a proactive and preventative approach. Post royal commission there is much scrutiny, much ground to make up and much at stake,” Mr Vaughan said.
“Many organisations tend to forecast an overly optimistic annual spend on data remediation without looking carefully at their ‘actual’ retrospective spend in previous years.
“However, organisations that will thrive both in corporate culture and consumer trust following the royal commission are those that take the initiative by routinely running internal monitoring and testing for potential breaches or process failures. Furthermore, successful organisations will communicate with their customers to inform, resolve and redeem any errors or failures that are discovered.”
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