The 2018 Australian Royal Commission into misconduct in the banking, superannuation and financial services industry is likely to have a significant impact on the investment management sector. Increased regulation of how investment data is managed is one likely consequence, meaning there will be new challenges to overcome.
Royal Commissions are independent public inquiries that investigate illegal activities, gross administrative incompetence and impropriety. This one was called by the Australian Federal Government to examine misconduct into the banking, superannuation and financial services industry, with an interim report published in September 2018.
In the hard-hitting report, Commissioner Kenneth Hayne heavily criticised the finance and banking sector in Australia, as well as regulators. Australian Banking Association chief executive Anna Bligh said of the report’s release, “Make no mistake, today is a day of shame for Australia’s banks.’’
While the Commission’s interim report focussed primarily on how Australian banks and insurance companies dealt with their customers i.e. the advice they were giving and products they were selling – it is likely to have far-reaching implications for the investment sector.
A key issue identified was how people invest their money. Investment brokers offer advice on how an investment should be structured, and where the money should be invested. What the report identified is that that advice has too often been driven more by the size of a broker’s commission for selling a particular product, rather than the best advice for their client.
Many investment managers rely on these brokers as a distribution channel. As a result of the report, access to funds is likely to become stricter and more regulated, especially in terms of how it is released to investment brokers and what they can then do with it.
As a result, when it comes to investment management data, the industry will need to ensure far greater accuracy. Funds will need to adopt best practices when it comes to managing this information, so they can have greater confidence in their decisions.
When the final report is released in February 2019, increased regulation and compliance frameworks are likely to result from it.
At AlphaCert, we have extensive experience in managing large and diverse sets of information from many different sources. Any regulatory change that occurs as a result of the Royal Commission will require a greater level of information that’s made available to investors, as well as increased levels of scrutiny and compliance. Building those components into investment management systems need to be as seamless as possible. AlphaCert puts you in control by providing peace of mind that your systems are compliant with any new regulations and increased restrictions.
Want to know what constitutes best practice when it comes to enterprise data management in the investment sector? Download our latest eBook on the subject.