With financial Services Authority (FSA) regulation looming, do current technology solutions allow protection advisers to create satisfactory audit trail?
Market views
Richard Verdin, Direct Life & Pension Services
There is not a simple yes or no answer to this question. Some firms are more ready than others and most providers haven't really raised their heads to look beyond delivering solutions for mortgage-only regulation. This just goes to show that there are some businesses working on technology solutions for advisers that just don't understand the way advice works.
Starting with the basics, by far the majority of individual protection policies sold are term assurance contracts. The majority of these are in some way linked to a mortgage, either because they were specifically bought to cover a mortgage or because it was the mortgage event that drove the customer to the adviser. It is therefore critical that protection technology solutions dovetail with mortgage technology solutions seamlessly. It is a fact that the customer expects to be dealt with holistically and not along financial services product lines. The adviser wants to deal with customers holistically and the FSA will want to see the whole file during any visit or future review. I suspect there is a growing likelihood that the disparate deliveries will inevitably lead to fallout and it is the adviser that will one day pay the price for it.
Regulation, from the adviser's perspective, is all about belt and braces. Unless the 'pure technology providers' start to really understand advisers then more advice-driven businesses will do what we have done and build their own technological solution.
Stephen Wynne-Jones, Assureweb
As FSA regulation approaches, advisers face, among others, two major challenges. First, ensuring that they are able to cope with the increased amount of administration and paperwork that regulation will drive into their business. And second, to ensure that the manner in which they deal with the paperwork and administration is fully compliant and will stand up to scrutiny in an audit.
There are technology tools that can, if adopted completely, help users to maintain a clear audit trail on all protection business. While many technology services already go a long way in helping regulated IFAs deal with their existing paperwork burden, there are desktop and internet-based technology solutions in development that will specifically assist advisers post-regulation for mortgage and general insurance products.
These solutions help guide advisers through the client administration and review processes, the linchpins of any regulated adviser's operations. They then facilitate the research, illustration and application of suitable products, perhaps accessing a restricted product panel, or products from the whole of market. Finally, they power post-sale activity such as commission reconciliation and policy servicing. At every stage the regulatory process can be followed precisely, relevant client documentation produced and the full compliance trail established.
Mark Anders, Liverpool Victoria
The technology available to protection advisers should enable them to create suitable audit trails as back up to their recommendations. Selecting the right technology for their business will be the key.
Integrating an appropriate portal into their business should enable an adviser to support all key stages of the advisory process including product research, comparative price quotations, online submission to providers and back office processes including client, policy and document management.
IT strategy will become an ever more important feature within advisory operations as the business environment continues to change. As well as providing suitable audit trails, the right IT solution will allow advisers to take advantage of other benefits that e-commerce affords, including cost reduction and improved efficiency in both pre-sale and post-sale activity.
As product providers continue putting more emphasis and development into electronic transactions it is imperative for advisers to adopt and develop the most suitable technology for the future of their business.
Charlie Musson, The Exchange
Back office administration systems provide advisers with a single entry point for client data. Once this data is entered, it can be recalled and viewed in a number of ways. As long as advisers' systems are backed up properly, this picture becomes a permanent record that can be tapped into at any time to ensure advice is relevant to their client's needs.
In some cases this audit trail is very formal. For example, the Officeweb back office system can be configured to ensure advisers complete certain tasks before moving on to the next one. This is known as a workflow management system.
But advisers not using a workflow management system can also create an audit trail if they are utilising technology within their business. If client activity is recorded electronically on a single back office administration system, and electronic portal services are used to research the market and compare products, an adviser's sales and decision-making processes are clear and auditable. Current technology solutions can certainly help advisers create a satisfactory audit trail. The key is to make sure they know how to utilise the existing technology within their business.
