Compliance challenge

Many brokers have acclimatised and no longer struggle with its intricacies.

Legislation, however, is not static; it is frequently changed, updated and refined. So brokers cannot be complacent when it comes to compliance issues. They need to remain educated, informed and on top of their game.

Unfortunately, the responsibilities of running a business can sometimes mean brokers don’t have time to research legislative changes and find out about the latest updates.

Aggregators, however, can play a key role in ‘easing the compliance burden’. Brokers should be able to turn to their aggregator for support, education and guidance.

That’s not to say the aggregator is wholly responsible for their brokers’ compliance, but an aggregator’s attitude towards helping its brokers meet their regulatory requirements can be indicative of its wider attitude to support, education and the brokers themselves.

“Compliance isn’t going away,” says Connective’s director, Glenn Lees. “It’s now an integral part of every activity that a broker carries out, whether it’s with the responsible lending requirements, or the general conduct obligations about how you run your business.”

The aggregator's role

While the onus when it comes to compliance is quite firmly on the broker, that’s not to say the aggregator does not have a role.

Only 2.9 per cent of brokers cited ‘compliance support’ as a key driver of a decision around switching in The Adviser’s Switching Aggregators survey. If an aggregator is coming up short in this area, however, it could be indicative of problems in other areas too.

“Aggregators do have a role when it comes to compliance,” says Mr Lees. “An aggregator’s job is to be an enabling platform – that’s our view.

“Many aggregators see themselves as a lending business [and they] use brokers to help them do that, whereas our view is that we are a business platform. We’re an enabling platform to allow the brokers who choose to join us to run their lending businesses.”

According to Mr Lees, if an aggregator has a cavalier attitude to helping brokers with their compliance, a broker should consider moving on because ultimately aggregation companies should be giving brokers what they need to run their businesses as efficiently as possible – and, of course, legally.

Voula Kotsiras, director and national sales manager at Port Group, says compliance support is extremely important and it has a number of processes in place to help its brokers.

“We have a compliance manager and she’s been in the industry for some time now,” Ms Kotsiras says. “She does audits with our members twice a year. Throughout the year she also changes templates and offers brokers support and guides them as to what their files should look like and how they should be doing things.

“Support is really important. Compliance is not something that we just leave them with.”

Port Group also regularly informs its brokers of legislative updates at professional development days, something she suspects most aggregators are doing.

“We’ve also given our brokers an example of what a fully compliant file should look like and they can follow that as a guide,” she adds. 

Liberty Network Services’ managing director, Brendan O’Donnell, says compliance support should no longer be a driver in brokers’ switching aggregators quite simply because all groups should be offering brokers exceptional support in this area. 

“With NCCP now firmly entrenched in day-to-day operations, brokers expect to be provided with all the support they need to [be compliant] if they choose to become a credit rep,” Mr O’Donnell says.

Aggregators should offer continuing training and they need to ensure their technology platforms provide seamless and integrated processes, he adds.

Software solutions

Connective’s Mr Lees says it’s well established now that a good software platform can help a broker be compliant.

“There is a requirement under NCCP to have good information systems,” he says. “You’re well on your way to meeting this requirement if you have a good software platform to get you started.

“It’s easier to be compliant if you have a good underpinning for your business – a well-executed software platform can be that underpinning.”

The issue does not need to be complicated. According to Mr Lees, software can ease brokers’ compliance burden simply by capturing and documenting what they are already doing.

“Compliance is all about demonstrating that you’ve done the right thing in the end,” he says. “In my experience, the vast majority of brokers do the right thing and they do it in a compliant way.

“The trick is to make sure that they’re documenting and capturing [actions and information]. Connective’s platform, Mercury, helps them do that.”

Mr Lees says that while many aggregation groups claim their compliance assistance and software platforms are ‘industry leading’, he believes Connective’s simple approach differentiates the aggregator from the rest.

“We try and promote compliance as the natural outcome of the process,” he says.