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Why Compliance Architecture makes sense

We often hear criticism of compliance requirements and the continuous focus on increased levels of scrutiny of Brokers. There is a sense of victimisation creeping into the industry which has caused many to feel de-valued and disenchanted with their role. The purpose for many Brokers in entering the industry is to provide assistance to those who would otherwise struggle to find the time to research for themselves or those who find the myriad of credit options too overwhelming to consider.

In particular, the Mortgage Broker in Australia has provided a necessary service to their community since the early 1990’s when the major Banks adopted this new channel of customer origination. The journey of the Mortgage Broker has been bumpy at times but its evolution to the professional space it holds today is testament to the adaptability and flexibility of its members.

The “GFC” setback in 2008 saw the Banks, particularly the majors, gain strength in the market but this was gradually re-distributed through the Broker channel over the next decade to where it is today – The fact that broker market share has increased to greater than 50 per cent of all mortgage applications and that the major banks continue to support the channel is further indicative of the value of the channel.

However, to continue their growth and to maintain consumer confidence, the industry must demonstrate that it is aligned to consumer service. This means that regulation and scrutiny of industry conduct is necessary and will provide consumer confidence as a backdrop to the development of the industry as a professional subset of the Finance discipline of Credit.

Embracing new and continuously changing regulations seems difficult because it relies on change and change can feel uncomfortable. Change requires new habits to be wrangled and old habits to be permanently disposed.

Compliance architecture is a concept of enabling new habits to be established without pain or suffering. It relies on the well established principles of convenience and organisation to identify triggers that cue behaviour patterns and to replace them with new triggers that support the new behaviours that are intended or desired. Science acknowledges the process of human automation as “habit”. These may be good or bad. Up to 40% of daily routine tasks are habits meaning that they involve little or no thought and are performed automatically. Things like: your morning routine. Notice how every work day is basically the same. From the first foot out of bed, the shower, the first coffee, the collection of necessary work “tools”, the trip to the car or other transport, the arrival at work and what happens next. There are several routines or habits clustered in this morning ritual. To change any one habit will require a reset and may even impact on other habits that form this ritual. So, the change must be worth the effort.

Compliance architecture works because rather than focusing on how to change the habit, it focuses on how to change the environment so that the triggers no longer exist.

For example, in the morning ritual, habits can be easily modified if the environment is changed such as from a work day to a vacation. When we change the environment, we also change the expectation of our “automated behaviour”.

The Finance Executive’s Platinum Care programme for Licensees changes the environment from daily grind to vacation. Your Licensee Register compliance becomes an auto report at the press of a button.