Investigations by the Australian Securities and Investments Commission (ASIC) into wealth management-related activities have increased by 216 per cent in the last six months alone as advisers are warned to improve their risk management.
Speaking at the ASIC Regtech Financial Advice Files symposium in Sydney, ASIC deputy chair, Daniel Crennan, said 24 people had been stopped from working in financial services during the last six months, including 13 who gave financial advice while another financial adviser received a 10-year jail sentence.
He said wealth managers should implement regulatory technology ‘regtech’ into their business models to improve compliance and risk management.
“As our financial services systems become larger, more complex, digitised and globalised, the expectations from regulators relating to compliance and risk remain high. As technology’s potential becomes more obvious, consumers’ expectations are rising also. And we do expect financial services organisations to keep up,” said Crennan.
“In order to improve risk management and minimise your compliance risks, you must include the capacity to explore, test and implement ‘compliance by design’ regtech solutions within your business model.”
Crennan, who is also the sponsoring commissioner for ASIC’s Office for Enforcement, said he hoped the use of regtech would lead to a fall in the number of ASIC enforcement actions, which would simultaneously free up ASIC resources.
“It would be ideal to witness a decrease in the number of ASIC’s compliance-related enforcement actions as a direct result of the industry’s uptake of regtech.
“Because if regtech can streamline and simplify compliance, the benefit to consumers and users of our financial system is that we can all focus our resources and investigations elsewhere.”
The symposium will be showcasing new technologies to help advisers and entities meet their regulatory requirements.