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19-371MR ASIC publishes findings from 2018–19 Regtech Initiative Series
Regulatory technology (regtech) will be a ‘must have’ for large firms in Australia’s financial services industry, according to ASIC’s Regtech Initiatives 2018–19 report.
The report covers observations and findings from four initiatives coordinated by ASIC in 2019. Each initiative was designed to explore how regtech can help businesses better manage their conduct-of-business compliance issues. By doing so, businesses can spend less time on compliance and more time maintaining market integrity and promoting better outcomes for consumers.
The four initiatives were:
- Financial Promotions Demonstration and Symposium: Five demonstrators analysed financial promotional material (both traditional and non-traditional media) to extract key features that identified potential risk and non-compliance characteristics.
- Financial Advice Files Demonstration and Symposium: Six demonstrators investigated how regtech could improve compliance and consumer advice outcomes.
- Voice Analytics and Voice-to-Text Symposium: Three demonstrators chosen by tender process examined how voice analytics, applied to over 1,700 insurance sales phone calls, could assist in analysing a sellers’ behaviour.
- Technology-assisted Guidance Tool: One regtech firm chosen by tender process designed a tool for ASIC to provide user-friendly licensing guidance.
The initiatives showed Australian regtech solutions can:
- detect potential breaches of mandatory disclosure requirements in financial promotions, with high rates of accuracy, at near real-time
- detect potential conduct breaches in financial advice files such as statements of advice (SOA)
- identify cases of poor sales practices/tactics in phone calls (stored, non-compressed recordings using voice analytics and voice-to-text technology)
- help ASIC provide guidance on licencing using a chatbot.
As well as summarising the results of symposium participants, the report includes observations from demonstrators and observers. While there is a great deal of activity in Australia’s regtech sector, many attendees believed that regtech’s inherently experimental nature has limited Australian research and development (R&D) funding to date.
'Particularly in the financial services and superannuation sectors, regtech has enormous potential to help firms save time and money on regulatory matters,' says Commissioner John Price. 'ASIC believes that we will soon reach the tipping point where not investing in regtech R&D will cost firms more in the long run.'
The report reflects observations that regtech will augment – not eliminate – roles in risk-management and compliance in Australia’s financial services industry.