RegTech relieves advice compliance burden

Yasmine Raso

Senior Journalist, Financial Newswire

23 November 2022

The majority of advice firms (84 per cent) believe the overall burden of compliance has risen in the last 12 months with several looking to invest more in RegTech, according to Netwealth’s 2022 AdviceTech Report.

The report also revealed 37 per cent of advice firms and 60 per cent of Netwealth-designated ‘AdviceTech Stars’ are already looking increase their investment in RegTech in the next financial year to keep up with demands from the Australian Securities and Investments Commission (ASIC) and other regulatory requirements.

This comes as RegTech as the second-most preferred ‘gamechanger’ for the financial advice industry in the next five years, agreed by 39 per cent of advice firms and 36 per cent of AdviceTech Stars.

The survey showed how RegTech is being used by both AdviceTech Stars and other firms across their operations, including managing legislative obligations like advice fee consent (49 per cent of Stars and 37 per cent of other firms), Statement of Advice (SoA) and Record of Advice (RoA) review (44 per cent of Stars and 43 per cent overall), and process or workflow management (44 per cent of Stars and 39 per cent overall).

“Typically, advisers tend to use the RegTech capabilities built into systems they already use,” Matt Heine, Joint Managing Director of Netwealth, said.

“But in some areas – notably breach reporting, risk management and audit – a significant proportion are making use of stand-alone solutions.

“RegTech is being used mainly to address Statement of Advice (SoA) and Record of Advice (RoA) issues, for process and workflow oversight and for meeting legislative obligations, including managing advice fee consent.”

The report also highlighted how AdviceTech Stars have tended to use RegTech in certain areas more than other advice firms, including regulatory reporting, risk management, monitoring data breaches and privacy, and transaction monitoring.