ASIC’s report on regulatory technology

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The Australian Securities and Investment Commission (ASIC) has published a report (Report 685) on ASIC’s Regtech initiatives during 2019-2020.

We’ve spoken previously about the benefits of advanced software when it comes to regulatory compliance.

Compliance processes are generally complex. They have many moving parts, and the amount of time and money required to enact processes can be high. Compliance management systems such as the Compliance HUB can simplify these processes and save a business both time and money. The ultimate aim of products such as the Compliance HUB is to embed compliance into decision-making.

Compliance management software can simplify compliance processes by streamlining and simplifying tasks, eliminating redundancies, and improving efficiency. For example, automation can be used to automate the review and approval of large quantities of documents. This frees up the time of personnel who are assigned to review documents to ensure they are compliant with company policies. Automation can also be used to automatically compare documents to pre-determined compliance standards.

In their report, ASIC note that ‘we consider that regulatory technology (Regtech) has significant potential to help businesses enhance their risk management and compliance activities.’ And that: ‘These enhancements will help deliver ‘compliance by design’ business models, as well as better consumer and market integrity outcomes.’

ASIC’s report is a strong endorsement for the Regtech sector and is reflective of the time and effort that ASIC have spent in understanding and developing the sector. On 7 August 2018, ASIC received funding from the Australian Government to help promote Australia’s Regtech solutions. As a consequence, ASIC have conducted a series of Regtech initiatives including the showcasing of Regtech solutions.

From conducting Regtech initiatives ASIC developed a strong understanding of the potential for Regtech. In their report, ASIC sets out a number of specific findings including:

  • The need for businesses to plan for a distributed workforce and consideration of the impact of this form of work in risk management, governance, compliance and business continuity planning.
  • The need for good data management. The benefits derived from data analytic solutions depend on the quality of the data that is used.
  • The opportunity for alternative datasets- for example when it comes to credit underwriting.
  • The need for subject matter experts- which is a critical component of our business with Regtech solutions being developed by compliance and legal experts with real world experience.
  • The opportunities to check and digitise information- including the benefit of systems connected via APIs.
  • The potential for Suptech to improve supervision and investigations- including from the regulatory enforcement side.

ASIC note that they are committed to the continued promotion of regtech and its use and consider that it can deliver better consumer and market integrity outcomes. You can read the complete ASIC report here.

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