Technologies enable reliable, sustainable compliance – are you keeping current?

The issue of compliance is hotting up as regulators extend requirements to keep pace with changing business norms, such as increased use of the mobile phone as a business tool.

January 11, 2010

The issue of compliance is hotting up as regulators extend requirements to keep pace with changing business norms, such as increased use of the mobile phone as a business tool.

This is compelling companies to find more efficient and sustainable compliance solutions – something evolving technologies and recording solutions can help provide, says Spescom, a company that provides communication solutions that also assist organisations to meet compliance and governance requirements.

Says Kgabo Badimo Managing Director of Spescom DataVoice: “With the introduction of new legislation like the Financial Advisory and Intermediary Services Act (FAIS) and Financial Intelligence Centre Act (FICA), many organisations have applied make-do, manual solutions to meet compliance requirements.

For example, many professionals, such as insurance brokers and lawyers, will do an after the fact ‘write-up’ or report of a telephonic interaction with a client rather than make a recording as the conversation takes place.

“This is highly inefficient and relies entirely on the memory and perspective of the person writing the report. In contrast, a recording provides an indisputable record of what was said and agreed to, and often gives the listener insight into the nuances of the interaction, such as intent.

“As compliance requirements become more intensive and volumes of interactions increase, sustainably maintaining these records using ‘manual’ procedures will become near impossible.”

These challenges are being recognised by international regulators. A good example, notes Badimo, is the imminent policy change expected from the UK’s Financial Services Authority (FSA), extending call recording requirements in UK financial markets from fixed-line and electronic communications to mobile calls. It is likely the EU and US regulators will follow suit.

In South Africa, the FAIS Act has put a considerable compliance burden on organisations. It requires authorised financial service providers to put in place appropriate procedures and systems to store recorded verbal and written communications in an appropriate electronic or recorded format that is accessible and readily reducible to written or printed form, and be able to quickly retrieve these records (within seven days) for inspection.

Specifically, records and recordings of client transactions relating to premature cancellations of products and complaints, as well as the continued compliance of the financial service provider needs to be maintained for a minimum of five years.

Says Badimo: “The risk of not complying is significant for independent financial advisors as well as larger organisations providing financial services. These regulations have been created to protect the consumer and the structures are in place to ensure they are being enforced in terms of the sale of products and advisory services.”

To illustrate the current situation, he points to the fact that the FAIS Ombud has, since inception, handled more than 22 000 complaints and enquiries from aggrieved financial services consumers involving total monetary compensation of R64 075 798.

The other half of the requirement is storage and retrieval – organisations must be able to quickly search for and access these records. This means businesses need to digitise and archive, documents, notes and files.

Says Badimo: “The technology needed to automate and speed processes, so enabling companies to quickly and easily meet compliance requirements, exists. However, many organisations have simply not taken the time to investigate the available technologies or to create a comprehensive solution that will meet their needs.”

Compliance technology

“New technologies and approaches can be integrated with existing systems transparently and often at low cost to deliver a reliable solution. Take, for example, the multifunctional devices that enable scanning and digitisation of contracts and other documents, allowing for easy electronic storage; or the new services and software applications that enable extraction of information from large databases.”

As technology advances, changing business norms are also being enabled through the development of new solutions. Says Badimo: “Spescom has recently developed an enterprise strength mobile phone recording solution that complements its standard landline recording solution, both ideally suited to comply with the FAIS requirements. In addition, it has launched a new solution – ReMo – that provides the same benefits for individual professionals and consumers using mobile phones to conduct business.”

ReMo comprises a mobile application and hosted service It captures subscribers’ mobile conversations, pictures and documents, uploading them seamlessly and securely to a hosted site, where this data can be managed, viewed, played, downloaded or sent by e-mail.

Says Badimo: “A primary benefit of ReMo is that it makes compliance and risk mitigation easy. ReMo recordings are legally admissible in a court of law.

They are time and date stamped, and have an algorithmic signature that makes any tampering with the recording evident. And the user has to do very little as the recordings are automatically made and uploaded. In addition, the data is hosted data offsite in a secure repository.”

Future developments

As the demand for compliance enabling solutions grows worldwide, more technologies will become available. Says Badimo: “It is important to begin to gear the organisation to transparently meet compliance requirements.

These requirements need to be integrated into processes that surround the marketing, sales and support of financial products and must be geared to support the technologies being used by brokers and clients. Suitable solutions exist – it’s just a matter of actively developing a compliance strategy and a policy for the business.”