The Prudential Handbook for Investment Firms – Improve business & compliance (Client Records)
The Prudential Handbook for investment firms issued by the Central Bank of Ireland sets out in a simple usable format how to comply with good practice and The Investment Intermediaries Act, 1995 for firms authorised under section 10 (Financial Advisors & Brokers). Chapter 1 outlines the requirements that define the relationship and transactions (Supervisory & Reporting, Section 14 of Act) required for an Intermediary and the Central Bank. Chapter 2 sets out the books and records required under section 19 of the Act, and provides details for all records and the standard of detail for those records covering:-
- General Principles
- Management Accounts
- Reconciliations
- Financial
- Client Funds
- Safe Custody
- Risk Management
- Company Secretarial
- Dealings with Clients
In conjunction with the consumer protection code, we extrapolate what is important as regards compliance, and is also good business practice:
- Detail & Accuracy of records & information
- Secure and authorised easy access to information and records
- Secure provenance and retention of original information
- Adherence to the processes relating to the exchange, creation, update, storage of Information.
- Adequate trained and qualified resources in the handling and/or processing of business information.
So how does a regulated firm deal with these requirements and, in fact improve their business as a result of addressing the guidelines?
The first driver should always be improved business performance; what does this business need to improve revenues, profits, staff & client satisfaction or whatever the primary business goal is? And how can adoption of the guidelines outlined in the Prudential Handbook for investment firms assist?
The first natural thought is often “more overhead, more paperwork and more cost”. However the majority of firms we talked with once they compared what they were doing before considering the guidelines indicated that there were business benefits in cost and quality of service immediately visible once some issues were addressed:
- Missing documents and records that were important in their dealings with their clients
- Time and cost involved in finding, reviewing and sharing relevant client records with stakeholders.
- Errors, omissions, and changes that impacted communications, responsiveness and relationships with clients
- Management Information, confidence and comfort that the business is in control and operating well
This also creates confidence in the potential for other benefits like growth of business and increased revenue.
The second driver of course is compliance with the Act and Consumer protection code. Failure to comply now comes with high impact consequences which could lead to as a minimum reputational damage or worst case business closure and/or imprisonment. Society demands greater control and transparency in the financial system following the recent financial system meltdown. The regulators are empowered to facilitate the improvement. How the regulator achieves this is through the identification of best practices, the codification of these practices into the rules, which assure good business practice and consistent compliance across the industry.
How can a firm improve business performance and compliance in parallel?
There are two critical success factors
- Having a single set of priorities that recognise that the business performance goals and compliance goals are aligned, ensures an effective and efficient set of actions.
- Leveraging cost effective software technology that addresses the core area of document and file management across the business and, provides assurance and evidence to stakeholders of the complete integrity of the process and records.
Products such as Brokerprove enable the achievement of the goals in a digital manner that can co-exist with a paper centric process, and existing software, but can also allow a significant reduction (if not total elimination) of paper processing and storage because of its unique patented and validated information security technology.
Brokerprove can be the foundation of your digital records systems, by ensuring that every document is correctly indexed, filed, and its authenticity is assured and can be proven to clients or to regulator, while meeting regulations for original data retention, and other relevant legislation such as the Data Protection act. Additional software products that can help further in document and workflow management, or in customer relationship management (CRM) can also improve business performance further. Brokerprove was designed by Financial Intermediaries for Financial intermediaries with a view to having a complete, managed and easily identifiable set of records, that can be accessed anywhere, anytime and can be automatically verified as authentic and compliant.
So let us consider the way the software can improve your dealings with and on behalf of clients in a compliant manner (Section 5, Chapter 2, Handbook).
5.1 “A firm shall maintain a copy of each investment management agreement entered into with a client for 6 years after the last transaction on that agreement, on behalf of the customer”
The Brokerprove software automatically creates a unique folder structure for each client project, where your firm’s agreement with that client can be stored and accessed. The folder structure creates a repository for every record/document type relating to that client such as “terms of business”. Not only that but each document is Digiproved and can be verified at any time that it has not been tampered with and is in fact the original (scanned or entered in digital format), thus meeting the requirements that assures a digital record meets the retention of records requirements.
5.2 “Where a client asks to see any record of his/her dealings with the firm, the firm can promptly provide access or a copy that is certified as being a true and complete record”
Any authorised member of staff can access the client’s complete record, anywhere, anytime and provide the client with a fully certified copy of any document relating to their dealings with the Client.
5.3 “Where a firm records telephone conversations it must maintain these recordings for a minimum 6 months or as long as might be relevant to any activity likely or underway”
Brokerprove enables all forms of digital data such as audio, video or image to be treated in the same way as any critical required business document relating to a client, and within the folder structure for that unique client or project. It leverages the patented Digiprove technology to assure the authenticity and integrity of the file in the same way as any other digital document or record.
Benefits
Once you have aligned your business & compliance goals and deployed Brokerprove, you will derive the benefits our current clients have experienced.
- Reduced paperwork and paper processing, by digitising the process
- Reduced storage requirements
- Significant cost reductions
- Improved professional productivity by having anytime, anywhere access to client and business records.
- Improved customer service and satisfaction due to flexibility and responsiveness of your business and professionals
- Improved professional productivity and related revenues
- Compliance relating to document and record management and retention.