What impact has the Breach Reporting Obligations had on advice audit programs?
Source Of News
By Joel Ronchi, CEO, January 2023
At Fourth Line, we’ve seen a marked increase in interest and client take-up of the Fourth Line Advice Assurance platform as licensees want real-time oversight of the quality of the advice provided by their advisers, especially in light of the Breach Reporting Obligations (BRO) which came into full effect in October 2021.
What impact has the BRO had on Licensee adviser audit behaviour?
The BRO encouraged many licensees to seek practical, efficient, and affordable ways to manage compliance obligations. To move away from traditional “backward-looking, random sampling” audit programs that are inadequate to meet the obligations of a modern-day licensee.
Clients tell us that the Courts and ASIC have made it clear – licensees are responsible for overseeing the quality of advice provided by their Financial Advisers. Licensees love the “safety net” Fourth Line provides around the “quality” of the advice and the sense of comfort of knowing each piece of advice is appropriate and compliant.
Licensees know that genuine advice oversight leads to mitigating financial risks associated with breach reporting and general licensee obligations, which benefits everyone – the licensee, the adviser, and the client.
Many licensees have finally understood that every piece of advice provided by each Adviser poses a potentially significant risk. To combat this, Licensees wanted access to timely, data-driven insights which highlight the quality of advice provided by Advisers; Compliance Managers wanted a dynamic digital tool they can use to help coach Advisers; and Advisers wanted absolute certainty that every piece of advice they provide is compliant every time. Fourth Line provides exactly this solution.
There is no doubt licensees are cautious when it comes to choosing and building their tech stack for fear of getting it “wrong”, however, our clients love Fourth Line because our web-based platform complements existing compliance frameworks, is easy to implement and use, and the reports are meaningful.
Curiously, we have seen a marked increase in the prevetting of advice, as opposed to the traditional ‘backward-looking” post-advice audits – proactive licensees understand the value of identifying advice-related issues before they become unavoidable problems. By interrogating the advice at the point of creation (before the SOA is presented), issues are fixed, problems are avoided, and breaches are averted. This builds trust with clients, enhances the reputation of the advice firm, and avoids costly client remediation programs.
Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs.
For information email: email@example.com