Compliance pressures mount for wealth managers

The compliance issues surrounding Wealth Management firms could hardly have passed those in the industry by. The importance of Know Your Customer information remains paramount to industry guidelines in order to ensure the consistent suitability of client portfolios. But a simple pre-requisite of this is that customer files must be managed effectively – an area which has seen numerous and continuous failings over the past year.

Despite the fact that there are clear guidelines in place from industry bodies, regulators and the wider industry community, many Wealth Management firms have been found to be holding inaccurate, out-of-date and even incomplete records about their clients. In December last year, a review by the FSA highlighted significant and widespread failings of many firms in keeping records that meet the required standards – a pattern that may well be echoed across the industry and is a concerning prospect for industry bodies and clients alike.

Firms are experiencing greater and greater compliance pressures - FATCA, Suitability, Anti Money Laundering and other pressing legislative and best practice imperatives continue to crowd in.  Processes, systems and structures must be in place even if companies already have this information. But there is a question of accuracy and completeness – are these records kept up to date? – and are they secure? – can they be accessed? The quality of records is imperative to the appropriateness of client portfolios and activities. After all, as the FSA found, without accurate records in place, there are often discrepancies between portfolios sand clients’ attitude to risk and their investment objectives.

Complacency is not an option when the consequence of failing to comply can be huge – e.g. a fine of up to £5,000,000, as well as the potentially calamitous reputational fall out. In order to avoid such stings, Wealth Managers need to have a system in place whereby firms can update their records quickly and accurately, as well as providing ready access should this be necessary to meet regulatory requirements.

Could Churchill & Direct Line’s £2.17m FSA fine have been avoided with better systems? Oh yes…

 ‘FSA imposes £2.17 million fine for failure by Direct Line and Churchill to conduct their businesses with due skill, care and diligence’
http://www.fsa.gov.uk/pages/Library/Communication/PR/2012/003.shtml

The Financial Services Authority (FSA) has imposed a fine of £2.17 million for failings by Direct Line Insurance Plc and Churchill Insurance Company to prevent files that the FSA had requested from being improperly altered.

In collecting the 50 complaint files for review, the FSA found 27 of the files were altered before submission, due to the firms failing to act with due skill, care and diligence. 

The failing for which these insurance firms are being penalised is clearly inappropriately enabling staff to alter files. This kind of alteration can largely only occur when files are stored without sufficient versioning control. In itself, this is a huge downfall, more so when an audit trail is required. For legally admissibility purposes document and content management applications make this impossible. 

Manually archived documents are not afforded the same security as those which are electronically available. For a long time, we have been professing that a document management system provides an indisputable record for files and as such a key element, and typical requirement, of this system is immutability – once an item is entered into the system it cannot be altered under any circumstance, and it seems that those within Direct Line and Churchill would have done well to have implemented such a system. 

Working with previous clients in the Financial Services arena has given us a full appreciation of the variety of needs that such organisations have. The main requirement is usually the ability to provide a clear audit trail of every single document – essential in order to comply with FSA requirements. Through using a document management system, the software enables all of the business content to be rigorously controlled and yet also easily shared, with the ability to administer security controls of various strength determined by the document itself. 

The main point associated with it is that once in the system, documents simply cannot be altered. This in itself that would have saved these two insurers a lot of trouble, and cash.

Customer service – is it really so important?

We think so.... with the proliferation of feedback sites, “your view counts” widgets and review pieces available on the web, the old adage that the customer is king has never been more true. Do right by the customer and your advocates will directly impact not only your reputation but also the health and future of your organisation. There’s research which measures and proves just how important this link is and intrinsic to this is customer service. This is of interest to Invu simply because in the course of the last two years or so we’ve been assiduously taking soundings from our customers in the shape of case studies and testimonials. We deliver document management based business solutions and in many, many cases the most striking benefit we hear is the genuine improvement in service to customers, clients and suppliers. And it’s across a range of sectors – from professional firms to manufacturers to social housing providers amongst others.

It’s this background which has made us consider the importance of customer service. Our latest whitepaper is dedicated to the topic and the background research has thrown up some compelling information – sure, some of it is a little long in the tooth, but if anything, with today’s more canny customers and greater access to information, aren’t the principles more likely to be exacerbated.

We’ve highlighted a number of areas where what we do correlates with those customer service actions which directly deliver ROI and business growth. This is terrific validation and we’re delighted to see the overlap. More widely though, for all business it does shine a light on the need to be competitive and to do right by your customers. Is your organisation able to deliver great service, to create a “wow” and to see things from the customer’s viewpoint? According to the Harvard Business School and the Institute of Customer Service anything which contributes to your ability to do so will deliver reputational, brand and financial benefits.  

There’s more detailed in the whitepaper - “The importance of customer service to your organisation’s future” – download it here 

We hope it gives you food for thought. 

FOI and Housing Associations

The Freedom of Information Act (FOI) came into force in 2005 and demands that individuals have the right to information, the right to confidentiality and the right to effective administration.

As such the act means that members of the public can demand information at any given time and it must be readily accessible. Considering today’s government is planning to consult on extending the FOI still further, this should give those Housing Associations with limited grip on their documents serious cause for concern.

A housing association typically holds vast amounts of information about each resident – past and present – and each property, making management of the sheer number of documents a trial in itself. It is therefore critical that a system and a set of robust processes are in place to manage such information, allowing administrators easy access to relevant material as requests are made.

Many housing associations are not however sufficiently equipped to easily produce information as requested, and are falling short when it is being demanded. Not being able to produce such information sends out the clear message that Housing Associations are not forward looking, not up to date and are simply inefficient when it comes to the management of documents. Above this, the simple time cost of manually trawling through documents in order to satisfy an FOI request can be enormous.

Housing Associations must realise that it isn’t difficult, costly or disruptive to manage information in such a way that enables ready compliance with the Act – even if the legislation is extended. Culturally it doesn’t have to be difficult either – in a society when information is readily available (the Google Corporation is after all now a verb), it will be nothing short of an anachronism that any organisation cannot access the right information immediately.

Housing Associations must therefore evaluate their processes ahead of more stringent requirements coming into force. The question is not just whether or not the FOI is appropriate to Housing Associations. In a way this doesn’t matter – from an operational and forward-looking perspective, the ability to comply should be a given. 

Further Reading:

http://www.insidehousing.co.uk/home/blogs/data-overload/6519921.article 

The Invu solution for Housing Associations - Adactus

The latest edition of Housing Technology has picked up on Adactus Housing and its use of Invu. (Check it out at http://tinyurl.com/Adactus-in-HT.)   This Housing Association has over 12,000 housing stock in the North West and recognised a compelling need to improve value for money, improved service and control amongst other issues.  Remedying these issues revolved around document processing and with Invu’s growing reputation and adoption in the HA sector Invu was selected. Adactus pinpointed the Finance department as the first port of call for a multi-staged project across the group. It’s much more than a simple secure repository – automated workflows, intelligent content extraction and integration with the finance system make this a pro-active solution. The Invu deployment has been a close engagement and a genuine collaboration to ensure deliver of a solution which fits the Adactus ambitions.

The finance process has been streamlined to the point where authorisation is quicker and matching against the finance system (QLf) is straightforward. There’s no measures yet on how much more speedy authorisation is but the level of control on exposure levels is much firmer now and this is a major step forward. There’s more details in the Adactus case study and we’re delighted that the Adactus solution is attracting the interest of other HAs in similar circumstances. It’s a project which has created a pattern which other HAs have now taken up and these are now being rolled out. Others have been keen to follow and we hope to see many more.  

If you’re interested in finding out how the Adactus solution might work for you then please get in touch: http://www.invu.net/about-us.aspx 

The Mortgage Market Review & You

As the governance, risk and compliance bandwagon rolls on, and the ongoing need to evidence suitable ‘Know Your Customer’-oriented processes, so the Mortgage Market Review (MMR) consultation paper arrived in late December.

But for the typical IFA, what does it mean to day-to-day processes and workflows? Following the MMR, the ability to build and assess a full and complete profile of a potential borrower in order to ascertain the risk to the lender becomes a necessity. And rightly so.

After all, squeezing interest rates and deposit thresholds in order to mitigate against the damage caused by unexpected losses will only get the lender so far in the current economic climate.

Know Your Customer is increasingly being about understanding the risk of potential customer’s appetites. However, lenders should be aware that when MMR legislation is blended with Anti-Money Laundering legislation will surely mean that it is only a matter of time before there is a high profile case where the lender is seen to be misleading borrowers. As a result, the manner in which documents are created, edited, stored and presented is absolutely crucial – in fact, business critical.

Brokers, wealth managers and other investment houses are increasingly putting systems in place to ensure that relevant checks are not only being made with regard to records, content and document management, but that also provide financial organisations with security against auditors and any potential customer complaints.

As with much of corporate best practice, it is considered a nice-to-have until legislation insists upon it. Well, in the case of IFAs and best practice document processing, that time has surely arrived.

Document & Content Management for Housing Associations: A White Paper

Most of the white papers we’ve produced to date have been generic in kind – that’s not to say that they’ve not had focus, but they’ve been as applicable to a manufacturer as to a constructor or a charity. We’re taking a slightly different tack with the latest off the production line. This is sector specific , notably Housing Associations and other Social Housing providers. That’s not to say that some of the points we make aren’t valid elsewhere of course, but the focus is on a group of organisations which is of increasing importance to Invu. The number of HAs that we deal with continues to rise and rise.

The Social Housing sector faces all manner of pressures, from keeping costs down to service levels to financial control. Document and content management can play their part in alleviating these pressures by acting as so much more than simple passive repositories. This is mature technology which can be optimised to deliver even more value and this paper sets out to explore the options. It’s borne out of our experience to date and, in particular, where we’ve been back to existing customers to explore how they can benefit from work we’ve done for other HAs with the latest versions and technologies at our disposal. For example, the Adactus invoice processing, workflow and QLF integration project has delivered a solution which is of genuine interest to many other HAs. Great news and those customers taking the solution on board will see real benefits, from ROI, service level improvements and that critical financial control.  

Why not download the whitepaper http://www.invu.net/info/whitepapers.aspx and see if your organisation can reap the benefits too?