Six Steps To Successfully Implement Regulatory Change In Your Organisation
Legislative and regulatory reform has had and will continue to have a significant impact on the superannuation industry. Fund Trustees are faced with the challenge of developing and implementing cost-effective solutions to meet their obligations, often within a condensed timeframe.
One recent example of regulatory reform – enforceable requirements relating to internal dispute resolution (IDR) – saw significant changes and standardisation to the IDR process for all ASIC regulated entities.
While ASIC engaged with industry and issued guidance in the form of Regulatory Guide 271 Internal Dispute Resolution, observations published in August 2022 have advised implementation shortcomings and areas of improvement required for compliance with the legal requirements.
Implementing change in short timeframes with the pressure of potential non-compliance with legal requirements is daunting. Therefore, we have outlined six steps in this article that will provide you with the structure and help with successful implementation.
Measure twice, cut once.
To minimise cost, time delay and risk, it is important to get things right the first time. Whilst this may not always be achievable, the following six steps will enable the successful implementation of solutions to meet changing legislative obligations.
Step 1 – Define your outcomes
It is integral to successful solution implementation that requirements are known as quickly as possible to enable a full impact assessment and solution design.
Take time to understand the implications of the solution and ensure that each requirement of the obligations have been met.
Step 2 – Simple is the ultimate sophistication
At times, the simplest solution is overlooked in lieu of an often-unattainable silver bullet, resulting in “paralysis by analysis” and delays to decision making.
Simple and effective solutions should be the primary focus to provide confidence that all requirements will be met by the required start date.
Enhancement and optimisation of solutions can be secondary deliverables if necessary.
Step 3 – Know your who, what, when, where and why’s
Having good project or program structure and governance facilitates an effective and efficient implementation process. It is vital that all impacted areas of the business are represented and kept informed to safeguard against under-delivery and unknown requirements.
Step 4 – Technology is your friend, not your foe
Solutions automation must always be a priority. Using automation as a starting position, work backwards to find the most automated solution possible.
Where fully automated solutions are unavailable, manual workarounds are implemented to meet the immediate need. This introduces additional risk and often requires unnecessary resource effort.
Typically, these “temporary” solutions become enduring solutions and result in ineffective and inefficient compliance with requirements. To avoid this, try and automate solutions where possible.
Step 5 – Do not operate in hope
There is a balancing act between developing solutions prior to requirements being finalised and not being ready. Planning to have a solution in place based on the known requirements and indicative commencement dates enables you to avoid “being caught out” when anticipated changes do not materialise.
Step 6 – Do, or do not, there is no try
Implementation of changes must be supported through each area of the business. Resources must have requisite capacity and time and to deliver the solution effectively.
Where conflicting priorities arise, any project and/or program concessions that are made, can have a direct impact to either the timeline and/or quality of solution delivery. Where possible, project and/or program changes should be avoided.
Once you have a plan, commit to it, and see it through to completion.
Case study for fragmented solution delivery
Interpreting and implementing legislative and regulatory change is complex. ASIC’s surveillance examining trustee’s compliance with the legal requirements in RG271 demonstrates the challenges industry has faced.
Trustees were tasked with developing a solution to:
Identify and report on expressions of dissatisfaction;
Expand the communication throughout the complaint resolution lifecycle and expedite resolution of complaints; and
Analyse complaint data to identify systemic issues.
At a high-level, ASIC observed the following potential issues:
Under recording within the industry;
Non-conformance with prescribed communication and timing requirements; and
Incomplete processes and/or procedural breakdown.
How could these challenges have been overcome?
On face value, these observations indicate absence of one or many of the key steps.
It is likely that these observations are the result of a combination of:
Incomplete project delivery by commencement date;
Solution design that requires significant manual processes;
A lack of end-to-end implementation consideration and readiness planning; and
Ineffective or non-existent preventative and detective controls.
ASIC have advised that they will continue to monitor compliance with regulatory obligations, with heightened focus and greater action to be taken as a result of subsequent surveillance.
Trustees are encouraged to continually review their end-to-end solution to ensure conformance and should consider the following aspects of their solution to mitigate risk of non-compliance:
Do communications meet the regulator’s expectations?
Are effective detective and preventative controls implemented to monitor adherence with legal requirements?
Are there significant manual process inputs required?
What is the level of confidence related to the correct capture and handling of expressions of dissatisfaction?
How is complaints data analysed and reported?
Final Word
Compliance with legal obligations should be a primary concern for all entities. Any solution must be fit for purpose and implemented successfully, with efficient and effective system-driven objective controls.
Investing in the right people and the right technology may seem expensive but having the confidence that regulatory surveillance will not impact you or your members - that’s priceless.
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If your organisation needs assistance with regulatory compliance, project implementation or technology driven controls, QMV can help
QMV provides trusted advisory, consulting and technology to Australia’s leading superannuation, insurance, banking and wealth management organisations. For further information please telephone our office p +61 3 9620 0707 or submit an online form.
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