The need for smarter document compliance

Authoring, approving and publishing regulated content shouldn’t be so complex and carry so much risk

10.10.2019

To know where we are going, we need to look back at where we have been:

My first memory of a problem in the UK Financial Services industry was endowments, the most recent and equally visible problem is of PPI mis-selling. Both events, and those in between, had a common outcome – significant action by the regulator focussing on a lack of clarity in the communication of information to customers and internal evidence of what was done and why.

Regulators are asking for more: an immutable audit trail of what went to customers

What problem could be next is debatable (General Data Protection Regulation, Markets in Financial Instruments Directive II, Payment Services Directive 2, Open Banking).

What is not debatable, is that the increased requirements of SMCR as well as Financial Promotions & Adverts and SYSC (Systems and Controls) means there is an increasing need for FI’s to be able to evidence everything that is visible to a customer. Accountable executives will need to demonstrate who authored content; who approved it; and maintain clear evidence of not only what was said but why.

Senior Managers and Certification Regime (SM&CR): The toughest regime

Initiatives such as SMCR, noted as being one of the toughest regimes globally, requires an FI to demonstrate more control, ensuring accountable executives are operating within their roles and responsibilities, especially with regards to customer facing activities such as brochures and disclosures.

At the same time, Financial Promotion and Adverts is under pressure due to the proliferation of brands, sub-brands, products and channels – each with their own set of brochures and disclosures (often with elements of common content) – means an increase in oversight effort to manage a matrix of versions and approvals that is growing in complexity.

Compliance can make or break your business

Regulatory developments are happening with greater scope and at greater pace. Accountable executives need more from their teams that helps inform them that they are operating within their roles and responsibilities. This support enables the business to avoid fines, maintain authorised status, build consumer confidence and ultimately help with the company valuation.

When a new product is launched there is good qualitative and quantitative information that feeds into the Product and Compliance meetings to agree new product. This creates debate, challenges and ultimately the best balance between product features, compliance and profit.

The next step is communicating this great new product to the Customer. There are different authors for different sections; different approvers; and a complex author and approval matrix across product managers, risk, compliance and legal; and marketing teams.

This stage is often seen to be managed through a combination of Word, email and track changes, resulting in multiple versions circulating in the business, with differing comments. All of which requires a small team to manage, coordinate and collate – with no certainty that everything has been captured (or that they are working with the latest version). A full approval pack for a set of products can take days or weeks to bring together.

Best practice tips

Ensure that you:

  • Have the ability to produce a verification pack for customer documents: a full immutable audit trail of the authoring, revisions and approvals.
  • Can react quickly to revise your documents for market or regulatory changes.
  • Have the tools for the business to work on a single source of truth.
  • Have a single view of changes by type of regulatory change.

 

We've recently published a solution brief on Smarter Document Compliance. If you'd like to get your hands on a copy, please contact me.


Stewart Davies, Head of UK Financial Services, Objective Keystone

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