In April 2010 the Australian Government rolled out the Future of Financial (FoFA) reforms, which were designed to change the way in which financial advice is delivered and received in Australia. The reforms came into effect in the Australian market in July 2012, with mandatory compliance required by July 2013. These legislations will affect all players in the financial planning industry, from product manufacturers to distributors to customers.
The aim of the FoFA reforms is two-fold: to make the financial advice industry more professional following the several failures during the recent economic downturn, and to increase the number of Australians using financial advice, while safeguarding their interests. The reforms will ensure more customer-friendly commission structures. Customers will also have the opportunity to periodically review the quality of advice rendered by their respective financial planners and opt-out if the services are not up to the mark.
FoFA reforms mandate the industry players to realign all their business, systems and processes with the regulatory changes. Technology can help the advisers, manufacturers and customers to transition into the new regime. Advisers will need to review existing IT systems, compliance frameworks and monitoring processes to be able to meet their statutory obligations under FOFA. New technological updates can help smooth over FoFA obligations and out-dated processes, by systematizing back-office processes and improving efficiencies.
With the internet, the customers' attitude to financial planning has also changed. The younger generation today operates in an 'always on' environment and expects to interact with the financial adviser online before taking any decision. For this, online tools for financial advice should be connected with the provider's back-office systems to facilitate seamless transactions. Advisers can also use business intelligence/analytics tools to segment their target customer base and tailor the service offerings as per target customer requirements. They can benefit by using CRM solutions, mobile technologies, digital channels and social media. Given below are the various technology solutions for FoFA compliance and transformation that are available:
Regulatory changes and new legislations are now part of everyday life in the financial services industry. Technology can help the various entities affected by FoFA to meet their legal obligations, while at the same time improve process effectiveness and efficiencies, reduce transaction costs and improve productivity.