Why access limitations are creating antiquated auditing processes

Australian Financial Services Licensees across the country would agree that most financial advisers provide fantastic, suitable and compliant advice to their clients.

A few, not so much.

Some have been intentionally malicious and some have simply been uneducated or ignorant. We all know about it, we hear about it in the media almost daily.

As a result, the process of researching, articulating and delivering advice in this country has changed significantly over the last decade. Countless amendments to regulations, licensee requirements, business rules and processes have been enforced to ensure that advice provided to clients is sound and of the highest quality. And for licensees this means meeting their ever-growing compliance requirements.

The true cost of risk and compliance issues 

No licensee wants to see their clients mistreated, misinformed or financially worse off as a result of poor advice, nor do they want to suffer the costly repercussions that follow. For this reason, risk and compliance remains a key focus for many licensees.

With the Parliamentary Committee on Corporations and Financial Services reporting that there are over 18,000 financial advisers in the country creating millions of statements of advice (SOAs) a year, the problem of ensuring financial advice complies with regulations is vast.

Behind many risk and compliance issues for financial services lie antiquated auditing methods. Even when hundreds of auditors are employed, the number of SOAs that can be checked will only ever be a tiny percentage of those that are produced. Manual auditing systems are labour-intensive, too loosely connected to be efficient and prone to human error. When the consequences of such errors are so heavy, companies need to find a new way of operating.

Antiquated auditing

With ASIC itself looking to become more data-driven, the time is ripe for financial institutions to adopt data initiatives that will solve their risk and compliance problems. A tool that allows institutions to access SOAs and automatically flag issues as they are created, no matter where they are located, is the obvious solution. Only then will it be possible to monitor in real-time all the SOAs produced across Australia, meaning red flags can be predicted proactively and dealt with before they become a problem.

The amount of money and faith financial institutions lose as a result of not investing in risk and compliance solutions is vast. Contact us today for more information on how Frisk can help.