FSRA sends back-office back to the drawing board
Thebiggest influence on the back-office technology provided to financial planners over the past year had nothing to do with bytes, modems or memory.
Like the rest of the financial services sector, it has in fact been the Financial Services Reform Act (FSRA) that has played the major part in the lives of many back-office technology providers over the past 12 months.
According to the national technical manager for the MLC group, Chris Drummer, while financial planners have been grappling with the requirements to comply with the FSRA, back-office technology providers have been equally busy re-building their systems to accommodate the new legislation.
According to Drummer, whose group offers its ThreeSixty back-office service to financial planners, the FSRA has seeped its way into most modules of back-office technology.
For example, with reporting, compliance and training modules a key component of most back-office systems, back office technology providers have had to adjust their programs to incorporate the new disclosure, licensing and education standards required of financial planners under the FSRA.
Drummer believes that this extends right down to having to build new databases capable of recording and tracking the education and training qualifications of each individual financial adviser who may be logged on to a back-office program.
Add all this together and it amounts to a massive spend on technology infrastructure by back-office service providers in order to ensure they stay relevant as their clients transition across to the FSRA.
“We have had a project team on this for two years in order to prepare and plan [for the FSRA] adequately,” Drummer says.
And the regulatory impact on back-office technology is unlikely to end with the FSRA.
The announcement last week by the Government that it had managed to pass through the Senate a raft of superannuation measures first announced at the last election, will once again send back office technology providers back to the drawing board.
Included in the measures passed by the Government is the provision to allow people to make superannuation contributions of up to $3,000 over three years on behalf of a child.
According to Drummer, this supposedly minor policy adjustment alone will force back-office software providers to undertake another overhaul of their systems to allow financial planners and their clients to set up accounts and make contributions for the benefit of minors.
Not that the providers of back-office technology are necessarily complaining.
If anything, more onerous regulatory requirements merely act to highlight to financial planning dealer groups the benefits of effective back-office systems, particularly when it comes to tracking compliance of those requirements.
While the back-office technology providers may be concerned regulatory changes in the financial services sector will be arduous, they could also prove to be very good for business.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
