The latest Netwealth AdviceTech Report found that 37 per cent of advice practices are looking to increase their investment in RegTech over the next financial year.
Almost four in 10 (39 per cent) of firms believe that dealing with the demands of ASIC and meeting regulatory compliance requirements are expected to be impacted most by technology over the next five years. By comparison, only 30 per cent of firms see managed accounts and 17 per cent see robo-advice being impacted most by technology.
Netwealth joint managing director Matt Heine said advisers tend to use RegTech capabilities that are built into the systems they already use, rather than standalone solutions.
However, he noted that in some areas such as breach reporting, risk management and audit, a significant proportion of firms are using separate systems.
“RegTech is being used mainly to address Statement of Advice (SOA) issues, for process and workflow oversight and for meeting legislative obligations, including managing advice fee consent,” Mr Heine said.
Interestingly, only 19 per cent of advice firms use a standalone system for fraud detection. The vast majority rely on solutions built into their existing systems.
The Australian Cyber Security Centre has categorised financial advisers under ‘critical infrastructure’, with past cases of cyber crime demonstrating that these types of organisations, alongside government bodies, were at a higher risk of online breaches.
Cyber security has become a critical issue in the advice industry following a Federal Court filing in May that RI Advice failed to adequately manage cyber security risks.
ASIC Deputy Chair Sarah Court said these cyber attacks on RI Advice were significant events that allowed third parties to gain unauthorised access to sensitive personal information.
“It is imperative for all entities, including licensees, to have adequate cyber security systems in place to protect against unauthorised access,” she said.
“ASIC strongly encourages all entities to follow the advice of the Australian Cyber Security Centre and adopt an enhanced cyber security position to improve cyber resilience in light of the heightened cyber threat environment.”
