Four Steps to Achieving Digital Compliance

The historical perspective

Historically, contracts for the provision of financial products and services were verbal, relying on trust. But we have come a long way from the early days of the London Stock Exchange and maritime brokers where contracts were made with no exchange of documents or written pledges. For many reasons, this informality became impractical:

  • The sheer volume of transactions and the growing complexity of the products & services

  • The desire of customers to have the reassurance of knowing exactly what the product or service was and the cost

  • The courts want evidence of the existence and terms of a contract

  • Business must know what its liabilities, duties, and obligations are

  • And more recently, regulators require that all the necessary information and disclosures are given to the customer – and want proof (if it’s not written down, it didn’t happen)

The way businesses handled the need for proof was to write down the basis of the contract (terms & conditions, brochures, key features, etc.) and keep a record – initially as paper, and as images later as the volume of business grew. As the phone became an additional channel, calls were recorded to supplement the audit trail of proof.

To make sure that business was being conducted in accordance with the rules and regulations, compliance undertook routine monitoring and reviews of the records to provide independent assurance that things were in order. In the event of a complaint or dispute, the records would be inspected to establish exactly what was said, what information was provided, if the customer was given all the details of the product or service, and if they were informed of the risks.

Regulators, auditors, and courts monitored the conduct of the business to ensure compliance with the rules.

The advent of digital

With the advent of digital, a new set of challenges and opportunities have arrived. Digital has enabled the development of ever-increasing sophistication in the assimilation and analysis of data, which enables businesses to personalize the digital customer journey to the point where (theoretically, at least) no two customer journeys are t ...

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