Move to standardise regtech to lift finance sector compliance

As the Banking Royal Commission continues its investigation into misconduct in the financial industry, a recently formed international body has released a set of guidelines aimed at improving compliance and transparency in the sector.

The guidelines have been developed by the London-based International RegTech Association (IRTA), representing often small start-up firms specialising in technology which insures that finance sector operators comply with government regulations.

The University of Sydney Business School’s Dr Daniel Gozman describes the release of the guidelines, which will impact on the operation of the RegTech sector and its relationship with the finance industry, as a “crucial development”.

“RegTech firms carry an enormous amount of responsibility for insuring that the finance sector meets its obligations to regulators and ultimately to their customers,” said Dr Gozman, who was a driving force behind the establishment of the IRTA and the drafting of the guidelines.

“When a piece of regulatory technology designed, for example, to detect money laundering or to stream data to regulations fails, it’s the regulated institution that suffers the consequences,” He added.

The guidelines are to be known as the “IRTA Principles for RegTech Firms” and are outlined in a pre-recorded webinar posted to the internet today (Wednesday). 

The Association says that they are “aimed at facilitating innovation and protecting innovators as they work on developing high-caliber RegTech solutions”.

In an invitation to the RegTech community to provide feedback regarding the “high-level” principles, the Association said they would “serve as an overarching framework intended to shape engagement and good practice for RegTech providers when working with all stakeholders, including customers, consumers, regulators and peer firms”.

Ben Richmond, the Chief Executive of the Association, has urged RegTech stakeholders “to embrace these new standards and to join us in our mission to advance the industry as a whole”. In doing so, feedback is encouraged from anyone involved with RegTech including investors, law firms, advisory firms, financial institutions, regulators and of course the RegTechs themselves.

“The IRTA has gathered great momentum throughout its inaugural year, and the IRTA Board has formulated a solid and evolutionary strategic plan for the Association’s second year of operation,” Mr Richmond said.