By nature, the finance industry requires compliance due to the strict regulations that firms must follow to protect client information. As a result of the abundance of private data circulating in the financial industry, this puts firms at risk of many data breaches and crimes, such as money laundering or illegal financing. Financial compliance helps to ensure that the risk of these crimes is reduced. But what is financial compliance exactly?
Financial compliance refers to the enforcement and regulation of the laws across the finance sector. Its existence is designed to protect customers, investors, the economy and society from the risks of financial crimes and manipulation – it’s a form of risk management, essentially. It also helps to ensure that markets remain transparent and fair. Regulatory compliance determines who can conduct business within the financial sector through an authorisation process established by the FCA.
The Financial Conduct Authority (FCA) regulates all of the financial services in the UK. It’s designed to protect consumers, stabilise the industry and maintain healthy competition between financial companies. It’s the responsibility of all active financial service companies in the UK to ensure that all financial advice given, and any products sold, fall within the boundaries of the FCA guidelines. New FCA regulations and other financial compliance regulations will usually crop up following a market crash or crisis to cover any weak spots in the system.
There is typically a compliance officer or an in-house lawyer who will monitor the company and ensure that they’re following the FCA regulations, as well as any internal financial compliance guidelines. For authorisation, businesses must prove that they are meeting the requirements with a secure system in place. It is also required that businesses notify regulators every time they make a change to the information they previously provided, to ensure all details are up to date.
Governing compliance has always been considered a challenge amongst financial companies – an obstacle to their success. However, to others, it’s the key to giving them the upper hand in an ever-growing, competitive market. Here are a few tips to help you ensure financial compliance:
Key Performance Indicators (KPIs) on new sales, and Management Information (MI) reports based on New Business Registers, are critical to maintaining the most up-to-date and relevant information about clients. These include regular discussions on:
All of the above creates a mountain of documentation for financial firms. When new business is all written, the various documentation needs to be easily identifiable for checking by the compliance team. This will then be analysed. Typically, specific clients or cases will be selected for review, and they will be ‘file checked’ before being processed. Therefore, it’s important that the correct software is in place to support the work of financial compliance officers and effectively manage customer data – with the help of document management software.
Virtual Cabinet document management software enables compliance departments to quickly collate all documentation together that relates to a new business sale or existing client via the indexing/searching process. All documents, regardless of where they originate from – be that the CRM, product provider, correspondence or email – are stored together in a uniformed file. A ‘task’ can then be set up to track the process through to completion and MI/reports are available to give a birds-eye-view by client, advisor, or case.
For more information on how Virtual Cabinet can help you manage your financial compliance, book a free demo with our industry experts. They have answers to your questions and an abundance of document management experience to help you manage your data in the most effective way.