“I ain’t tryna tell you what to do
But try to play it cool
Baby, I ain’t playing by your rules
Everything look better with a view”
— “Mood”, 24kGoldn
Three Key Changes
Our Managing Director frequently notes that, in financial services, too much change is never enough so we took him at his word and
1. Launched a compliance planner. We work in a complex, complicated and frequently changing industry and many smaller players struggle to keep up. On advice from Kellie, we’ve mapped out the key considerations for 2021 to make change more visible and help make your job easier. While it’s not as sophisticated or interactive as the dynamic feature in openAFSL, it’s free and regularly updated.
2. Redesigned OpenAFSL. The Development Team deserves a lot of credit for the new UI and complete redesign, but the refinement of the algorithms and core processes, provide users with a much cleaner interface, increased flexibility and market-leading enhancements that make the application indispensable.
3. Moved. If you attended any of our functions in January, you’ll already know that Assured Support has moved to new premises. We’d love to see you so please feel free to drop in to our office at 439-441 Kent Street, Sydney.
But I No Complain
Many advisers express concern about AFCA, their processes and their willingness to represent complainants’ interests. Things don’t always go AFCA’s way and we’d refer you to DH Flinders v AFCA.
In this case, Stevenson J highlighted AFCA’s lack of jurisdiction and observed that “I do not see [AFCA] rules as contemplating AFCA giving advice as to whether a complainant about one Financial Firm might better, or alternatively, be directed to another Financial Firm”.#smartercompliance
Read the judgment. In addition to suggesting that AFCA should not actively identify for complainants other parties that ‘may be’ liable, it also highlighted that AFCA’s rules only encompass conduct that is ‘within authority’.
In short, the Court concluded that under the AFCA rules, a Licensee isn’t responsible for a representative’s conduct where the representative’s conduct does not align with their “actual, ostensible or apparent … authority.”
Bear with Us
“You can get more with a kind word and a gun than with just a kind word.”
— Al Capone
It often falls to “Compliance” to hold the line and advocate for accountability but, as the Royal Commission highlighted, it’s a fools crusade; if one manages to escape practical irrelevancy, the best outcome for effective managers is corporate martyrdom.
When, in reality, the three-lines of defence prove to be as robust as the Maginot Line, even the rare regulatory successes prove to be no more than pyrrhic victories.
The smart guys have also argued that regulators are backward looking, that ethics can’t be taught and that compliance offers nothing more than increased bureaucracy and pointless processes.
The next time the “smart guys” in your business offer you this expert opinion, refer them to “Regulating Accountability: An early look at the Banking Executive Accountability Regime (BEAR)” by Elizabeth Sheedy & Dominic Canestrari-Soh.
read “regulating accountability”
In our experience, encouraging and embedding an effective risk culture is difficult to do but Sheedy’s study seems to suggest that clearly articulating (and enforcing) expectations, can help a culture of accountability develop. Their focus on industry’s response to regulatory expectations (BEAR) demonstrates that risk governance is materially improved by an unwavering expectation of individual accountability’.
Visible speed cameras deter speeding and knowing that relevant managers will be held individually accountable for risk and governance failures, encourages those managers to respond to compliance issues with care, attention and alacrity.
Who could have known that incentives work?
“To the extent that the clarity comes with better transparency around your individual ability to drive a decision and an outcome, that’s got to be a good thing. Because it empowers you.”
— Regulating Accountability: An early look at the Banking Executive Accountability Regime (BEAR) Elizabeth Sheedy & Dominic Canestrari-Soh
While the study might not absolve either RI Advice or IOOF, the study observes that the “voice of compliance” now carries greater weight in decision making; it’s dangerous to confuse consultation with collaboration, but the possibility of real accountability seems to encourage line management to proactively engage with compliance to, at least, ensure their decisions are defensible.
The authors also note that BEAR (and the possibility of the Financial Accountability Regime expected to be introduced by June 2021) will reinforce Licensees laser-focus on the competence, capability and courage of their compliance resources. As we’ve previously highlighted, the considered efforts leading Licensees have made to address underperformance, will attract renewed attention in 2021.
It seems, now-days, that every coder is a compliance expert, but “Regulating Accountability” challenges their shibboleths; the “additional administrative burdens” are ‘manageable and a price worth paying’, the additional processes valuable and expectation of “accountability” have not dissuaded competent people or driven leaders from financial services to other industries. While anecdotal evidence suggests that “mouth-breathing executives” have sought opportunities elsewhere (an exodus encouraged by the Royal Commission) Licensees are not reporting difficulty finding suitable people to assume leadership roles. In fact, some executives’ apprehension created opportunities for others traditionally overlooked for leadership roles because of gender, competency or ethics.
