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Conduct Risk

AFCA: Old wine in a new bottle?

November 7, 2017

Smarter Compliance. The central plank of the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 (‘the AFCA Bill’) is the establishment of a single not-for-profit external dispute resolution (EDR) body with a broad jurisdiction. This new super-EDR will hear complaints against financial institutions including Australian Financial Services Licensees, credit providers and credit representatives, superannuation funds (other than self-managed superannuation funds), approved deposit funds, life insurers and general insurers. The ABA thinks it's a great idea but I have some reservations.

The reg-tech promise

September 11, 2017

Smarter Compliance. The Industry's eagerness to invest in technological compliance solutions is both commendable and personally appreciated, but a measure of caution is required. The fundamental failure of most reg-tech "solutions" is that they are, in most cases, applications looking for a problem rather than automated solutions to real problems. Solutions should be "compliance driven" rather than "technology driven". In my opinion, reg-tech's purpose is to address conduct risks and regulatory burdens efficiently, effectively and in a way that improves the profitability and sustainability of the user's business.

Who Watches The Watchers? ASIC Reporting Limitations For Large Institutions

April 17, 2017

Smarter Compliance. ASIC Report 515 "Financial advice: Review of how large institutions oversee their advisers" reported on ASIC's review of 160 client files that had previously been reviewed by the Licensees themselves and identified the discrepancies. Conflicts, capability and culture are the main problems but systems, processes and purposes also have significant impact. (Our companion post addresses systems, processes and purposes in more detail)

The “promise” of digital advice

November 10, 2016

Smarter Compliance. As financial services experts, we know that investors who do not use advisers, underperform when compared to the annual average returns to the market. We also know that studies have also shown that poor investment results are often a direct result of the investor’s behaviour, rather than the performance of the portfolio or its underlying assets. It should be obvious that automating some decision-making processes will help investors make better investment decisions and achieve better outcomes. So how do we explain the industry’s hesitation to embrace digital advice?

Gliding over all: Beyond Banking Bad

May 10, 2014

Smarter Compliance. Although it’s difficult to assess its impact on the broader community, there is little doubt that Four Corners’ “expose” of Commonwealth Financial Planning generated contemplation, conversation and consternation in the financial services industry. The recent story “ Banking Bad” by Adele Ferguson and Deb Masters focused on the sales-driven culture inside the Commonwealth Bank's financial planning division; but it also raised additional questions about the structure and composition of the broader advice industry.

Crises of culture

April 12, 2014

Smarter Compliance. A recent report on the financial services industry noted that while industry executives "champion the importance of ethical conduct …. they struggle to see the benefits of greater adherence to ethical standards". So how do we reconcile statements that "ethical conduct is just as important as financial success at their firm" with acknowledgements "that strict adherence to such codes [makes] career progression difficult." What does this contradiction really mean for Compliance Managers and shareholders?

The creeping cost of fraud

December 31, 2013

Smart compliance people know that although adviser fraud has a broad impact on Licensees, the industry and consumers, it also has a more profound and pervasive impact than is publicly acknowledged.

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