CPD: RegTech solutions for Australian financial advisers – an overview


RegTech has an important role to play in freeing up more of a planner’s time to focus on their clients’ needs.


No study of emerging trends in financial services – and indeed financial advice – would be complete unless it examined the growing importance of RegTech.

Regulatory Technology (RegTech) refers to the use of technology to achieve regulatory objectives. This can include its use by businesses to manage regulatory compliance, and by governments to manage oversight, benefiting consumers, companies and regulators. Whilst in its broadest sense RegTech is sector agnostic, its adoption has been especially strong in the financial services industry, where regulatory complexity and the massive scale of customer data and interactions make its benefits more obvious.

RegTech is a rapidly growing sector, valued at over USD $15 billion globally and expected to grow to nearly $90 billion by the year 2028[1]. Australia is at the forefront of RegTech, both in terms of usage and the scale of innovation, with our 80 locally headquartered RegTech firms putting Australia behind only the UK and USA as a Regtech hub[2].

Analysis[3] of Australian bank financial results in 2021 revealed that close to 50% of all investment spend was on regulatory and compliance activities, and, unsurprisingly, much of the investment in Regtech to date has been driven by larger firms[4] using RegTech to help in areas including Anti Money Laundering, cybersecurity, and customer data protection.

But, increasingly, RegTech solutions, in both ‘low tech’ and high tech’ forms are being adopted by small and medium firms in the financial advice sector, as more accessible solutions continue to come to market, either as new standalone offerings, or as enhancements to popular and established platforms.

And, as a glimpse of the financial news proves, Licensees and individual financial advisers are increasingly starting to realise the potential for Regtech to improve the accuracy and efficiency of their compliance, and thus contribute positively to both their client experience and their overall sustainability.

Advisers – and consumers – have a headache

A 2019 survey of FPA members[5] revealed the escalating costs of compliance to be advisers’ number one challenge. A year later, in the darkest days of COVID-19, an ongoing study by Investment Trends found that the compliance burden was still their number one business challenge, cited by 68% of advisers, ahead of the 59% who nominated ‘Disruption from COVID-19’ as their main challenge[6].

These concerns translate directly into an issue for the 2 million[7] or so consumers currently seeking advice, as the rapidly increasing cost of providing advice puts it out of reach to all but the well-off. Combined with the continuing decline in the supply of advice – adviser numbers have shrunk by 40% since 2018 – we see a significant, and growing, advice gap.

In simple terms, one of the most powerful pillars of consumer protection is being eroded daily.

Technology is the solution advisers can control

While there is clear scope for regulatory reform to play a role here – the FSC estimating[8] that the time and cost to produce advice could be slashed by a third with the right changes – it would be foolhardy to pin too much hope on meaningful change happening any time soon.

What advisers can control is their own approach to the existing regulatory framework, and here technology can play a crucial role in driving improved efficiency, compliance and client outcomes. Happily, this is a point acknowledged by Australian advisers. ASIC has found widespread adviser acknowledgement of the benefits of technology in its regular industry consultations[9]. Respondents to a 2019 survey by Netwealth nominated RegTech, Artificial Intelligence and machine learning as the technologies that would have the greatest impact on financial advice practices over the coming 5 years[10].

Importantly, the reshaping of the advice licensing landscape, from large institutionally owned licensees to more boutiques and self-licensed practices, creates the conditions for more rapid RegTech adoption, as advisers are no longer dependent on their institutional owners – and their lengthy procurement processes – to make technology purchase decisions.

Advisers are now, more than ever, empowered to make their own technology choices, enabling them to implement preferred solutions into their business, faster.

RegTech solutions can be both low and high tech

Most discussions about RegTech focus on the ‘high tech’ or leading-edge solutions being developed across the RegTech ecosystem.

In a recent survey[11] of RegTech solutions, Deloitte identified the key technologies as including:

  • big data and analytics, improving monitoring, reporting and decision-making
  • voice and text recognition, to identify regulatory requirements and track compliance
  • smart contracts, to automate compliant contract creation and execution
  • cloud computing, enabling businesses to create scalable platforms that connect the business to multiple data sources and regulators, and
  • Blockchain solutions, to track and evidence compliant transactions.

But existing ‘low tech’ solutions, including digitised data, forms and transactions, can be equally impactful (which makes it all the more surprising that only around one third of advisers are currently using an online fact find and risk profiling tool[12]).

RegTech can help advisers and AFSLs streamline compliance processes in areas ranging from marketing, client communication, product documentation, knowing your customers, anti-money laundering and cyber security.

Marketing compliance software like Red Marker can identify legal and brand risks in documents and websites. PDF – to – digital technologies can help planners capture and audit content from thousands of PDF documents, and voice data analytics providers can record conversations to pick up on the nuances of customer interactions, allowing greater transparency, in an aggregated form, on the quality of those interactions. Automating processes such as opt-in, FDS, identity verification, and the use of AI to scan SOAs, also has obvious and meaningful benefits.

While historically RegTech tools were used mainly for auditing and post advice checks, according to one expert, “the vast majority of users are now using them to pre-vet every single piece of advice to help the advisers get high-quality compliant advice out to market, much faster than they were ever able to before”[13].

Solving traditional pain points with RegTech

The compliance burden has been a longstanding issue for the financial advice sector, but the damning findings of ASIC Report 515, and then the soul baring exercise that was the 2018 Royal Commission, has seen scrutiny – government, regulatory and media – intensify even further. AFSLs and individual advisers are understandably anxious, adopting an increasingly conservative approach to compliance issues.

Licensees are looking to save their businesses from the costs and reputational damage associated with complaints, breaches, non-compliance, and the associated remediation. The speed of detection, and pre-emptive ways of mitigating these remediation look-back issues, is critically important.

Equally important for Licensees is the need to improve the transparency, management, and reporting of:

  • conflicts-of-interest
  • governance and risk-management practices
  • risk culture, and
  • accountability mechanisms.

Appropriate RegTech solutions can help give Licensees oversight at scale, in a way that integrates with their CRM. The pre-vetting of all advice files, not just post-advice samples, also becomes possible, which can be valuable when negotiating with Professional Indemnity insurers. Real time insights can also help with targeted intervention and resource allocation.

A recent catalyst for many Licensees to consider RegTech more closely is the Design and Distribution Obligation (DDO) Regime.

Several solutions – including a collaboration between IRESS and Objective Corporation – came to market in response to DDO, designed to help licensees and product issuers meet new obligations around data storage, and the publishing and access to Target Market Determinations (TMDs).

From an individual adviser’s perspective, the priority is improving the speed of getting quality advice out to clients.

Examples of the ways RegTech solutions can achieve this include:

  • regTech self-check tools can be used by advisers and paraplanners to triage advice pre-vets
  • advice checks to pre-empt/ mitigate remediation issues and help keep compliance records in order for easier look back, and
  • the embedded tips in some RegTech tools can make team coaching more effective.

Examples of RegTech solutions

A diverse range of RegTech solutions are available to financial advisers, including an increasing number of solutions developed specifically in response to the unique needs of the Australian market.

Some solutions are standalone RegTech offerings, whilst a number of existing platforms have also enhanced their products to include RegTech elements.

High profile examples of standalone RegTech platforms include:

  • Advice RegTech: Their flagship offering – SAMI (Supervision and Monitoring Intelligence)- is a compliance system-of-record for Reviewers’ advice file decisions, with workflow features to support action assignment and escalation. SAMI is designed to support Licensee oversight of Best Interest Duty and related obligations, with dashboard reporting and drilldowns on Reviews, helping with proactive management, record keeping, look-back, re-reviews and for ongoing uplift for both Reviewers and Advisers.
  • Fourth Line: Its ‘bionic’ review process-augments an automated algorithmic approach, incorporating machine learning, artificial intelligence, and natural language processing, with critical human oversight, to transform and drive efficient review processes. They can review SOAs, Fact Finds, Risk Profiles, and Adviser File Notes.
  • TICQ: TICQ position themselves as ‘the first line of defence against compliance anxiety’. Their solutions include oversight of risks, trends and clients in all advice prepared across a practice, collaboration in advice pre-vetting to catch problems in advice files before they reach clients, triaging of advice remediation cases, and risk reviews.
  • Midwinter KRIS: Midwinter’s Key Risk Indicator Solution (KRIS) allows Licensees to gain visibility of potential compliance breachers in real time, from a customised dashboard, and including the ability to send real time alerts to individual advisers.
  • Artemis: Artemis, the result of a partnership between Kaplan and Red Marker, is a tool to help financial advisers detect possible compliance issues in marketing materials and client communications. The tool can flag risky content as it is being created across web pages, Microsoft Word documents, PDFs, and client communications. Artemis also reviews proposed social media posts, an area where many advisers lack confidence, especially after ASIC’s recent finfluencer crackdown. According to Kaplan Professional chief executive Brian Knight, “Artemis not only minimises the risk of publishing misleading content, it actively educates advisers through real-time feedback, just-in-time learning interventions and professional development opportunities where necessary “[14].

Existing platforms who have publicly declared their RegTech credentials include HUB24, who have partnered with several licensees to roll out software focused on ‘preventing issues with advice rather than detecting them’[15], and advice software provider Astute Wheel, who have embedded compliance elements into their base offering.

Of course, the examples above are listed for illustrative purposes, not endorsement. The list is by no means exhaustive, and new solutions are coming to market all the time.

Readers looking for a more comprehensive list of RegTech providers should use the directory hosted on the website of the RegTech Association.

ASIC and RegTech

ASIC are longstanding advocates for the power of RegTech, and as well as trialling a number of RegTech platforms across areas including advice and market supervision, they have facilitated a number of forums where providers demonstrate their capabilities to industry stakeholders.

At one such forum, working with a sample of synthetic advice files provided by ASIC, demonstrators used combinations of natural language processing (NLP), rules-based expert systems, proprietary artificial intelligence (AI), and application programming interface (API), to identify a range of potential compliance issues in the sample files.

Demonstrators were able to rate the level of potential risk to clients contained in various advice documents. When combined with real-time or near real-time tracking, this would enable them to capture, flag and investigate potential misconduct in financial advice prior to it being provided to a client, or within hours of being sent to a client.

In his opening statement to the 2019 ASIC Regtech Financial Advice Symposium[16], then Deputy Chair Daniel Crennan called on industry to prioritise investment in RegTech in order to meet regulatory, compliance and professional obligations. ‘The status quo is no longer an option. ASIC expects more. Consumers expect more,’ Crennan said.

Crennan said that as the financial services system becomes larger, more complex, digitised, and globalised, regulators’ expectations with respect to compliance and risk remain high.  He added that consumers’ expectations are also rising.

ASIC’s expectation, he said, is that ‘organisations keep up’.

For their part, ASIC has been exploring RegTech applications in a number of areas to demonstrate its possibilities to businesses, including:

  • ensuring financial promotional material delivered in a variety of formats (web banners, billboards, print, television, and radio) are clear, balanced, meet disclosure obligations, and are not misleading or deceptive
  • exploring less resource-intensive ways to confirm financial advice is compliant, using natural language processing and AI, and
  • checking for poor sales conduct in life insurance sales calls using voice analytics and voice-to-text trial.

Consumers will be the ultimate winners

At a superficial level, it can be tempting to believe the real benefits to advisers of RegTech are about minimising compliance costs and minimising compliance risks through automation, but this misses the real point.

The real, long-term benefit will be the restoration of trust in the financial advice sector, and an increase in the accessibility of quality advice to more Australians. Ultimately this improves the overall financial resilience of our communities.

As Samantha Clark, CEO of Advice RegTech, told FPA’s Money and Life magazine[17], “Research shows us time and again that many Australians have unmet advice needs,” she says. “RegTech has an important role to play in freeing up more of a planner’s time to focus on their clients’ needs. Any solution that can help financial planning businesses get back to business is key for both the profession and for Australians who are seeking quality advice to support their financial wellbeing.”



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[2] https://www.afr.com/companies/financial-services/australia-in-a-strong-position-on-regtech-20210615-p581ad
[4] https://www.pc.gov.au/research/completed/regulatory-technology
[5] https://www.moneyandlife.com.au/professionals/insight/regtech-improving-advice-efficiency/
[6] https://www.professionalplanner.com.au/2020/04/covid-19-the-second-biggest-challenge-for-advisers-in-2020/
[7] Ibid.
[8] https://www.moneymanagement.com.au/features/expert-analysis/using-technology-reduce-advice-hours
[9] https://www.professionalplanner.com.au/2021/04/advisers-have-no-appetite-for-digital-advice-asic/
[10] https://www.ifa.com.au/news/26725-ai-to-impact-all-aspects-of-advice-report
[11] https://www2.deloitte.com/lu/en/pages/technology/articles/regtech-companies-compliance.html
[12] https://www.moneymanagement.com.au/features/expert-analysis/using-technology-reduce-advice-hours
[13] https://www.moneymanagement.com.au/news/financial-planning/advice-industry-lacking-great-technology-businesses
[14] https://www.adviserinnovation.com.au/news/kaplan-issues-marketing-tool
[15] https://www.ifa.com.au/news/29310-how-hub24-is-reigniting-the-regtech-race
[16] https://asic.gov.au/about-asic/news-centre/speeches/asic-regtech-financial-advice-files-symposium-opening-statement/
[17] https://www.moneyandlife.com.au/professionals/insight/regtech-improving-advice-efficiency/

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