2006 Press Releases

Date: 14 November 2006

Compliance fears drive record keeping in wealth management market

Efficient record keeping is the cornerstone of compliance

Over 65% of companies operating in the rapidly growing wealth management sector, comprised of stockbrokers and private client management firms, have cited compliance as the key market driver for the adoption of an effective record keeping process, according to a survey conducted by Objective Corporation.

The new regulatory framework in the sector, including the Capital Requirements Directive and MiFID, which comes into force in January 2007, as well as other ongoing FSA requirements, were all cited by respondents.

With records management rapidly becoming a high priority on many company agendas as a result of recent corporate wrongdoings, efficient record keeping is being viewed as key to complying with legislation and to restoring the trust of stakeholders, especially customers and investors.

Other key market drivers in the sector include:

• 35% of the sample stated that is was the need for rapid access to - and quick retrieval of - information that was one of the key issues affecting their record keeping decisions.
• This is largely prompted by the pressures created by 'legal discovery' - whereby an organisation may be required, as part of a legal process, to produce all records that relate to a particular client. In a corporate world that faces the increased threat of litigation, organisations need to develop a sound, policy-driven records management strategy that encompasses all corporate information.
• A further 35% stated that one of the key reasons they would adopt an effective record keeping solution was the return on investment garnered as a result of space saving and other costs associated with the storage of paper records.
• 65% of respondents rated their readiness to meet new records management legislation as less than 50%.

Records provide evidence of corporate activity, whether that be an electronic document or a physical file, and there are a number of reasons why these need to be kept:

• Liability
• Business continuity
• Legal requirements

Gary Fisher, COO Europe, Objective Corporation, stated: “It is important to remember that only relevant documentation needs to be retained. The natural human response is to keep everything and this is not an effective policy. The second impulse, in response to the growth of scandals, is to do the opposite and retain as little as possible, and once again this is simply not a viable policy. The basic premise of so much recent legislation is to protect investors and customers alike by improving the accuracy and reliability of corporate auditing processes and financial disclosures. It is within this context that organisations must operate.”

An effective records management system needs to be the bedrock for any retention policy that specifies why the document is being kept, what the retention period is, and who has final authority for its eventual destruction. To minimise the risk of non-compliance, it is essential that records are kept for as long as necessary, but then be systematically archived or destroyed when the legal retention period has expired. This is true for organisations in any industry, but especially for financial services firms in light of recent non-compliance cases.

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