An aggregator has explained its plan of attack to ensure broker compliance with the imminent Best Interests Duty (BID) utilises a combination of data, artificial intelligence (AI) and machine learning.
According to Loan Market chief compliance officer, David McQueen, machine learning is an “innovative approach” to justifying brokers’ product recommendations.
“BID will require all brokers to prove their recommendations and activities were in accordance with the best interests of their customers,” said McQueen.
“Proof of compliance will be just as important as the act of compliance in meeting the obligations.
“Where the brokers justify their recommendations for a product in their notes, machine learning examines the word count and looks for keywords to evaluate the strength of their explanation,” he added.
“The AI can pick up trends in the file. If red flags are detected, we can raise this with the broker in real-time in the submission process.”
This is where the group's tech-driven approach is complemented by the human touch.
“If the broker is deemed to have any risk or errors in their applications, our Broker Success Managers (BSM) coach them on what they may need to do to change,” said McQueen.
“The BSM shares with the broker their individual report so they can see where they’re falling short of BID standards; they can even see how they compare to the rest of the network through blind rankings.”
The chief compliance officer described the group’s approach to BID as “compliance by design”.
“We’ve always maintained that BID presents an opportunity for brokers to create stronger relationships with their clients,” he said.
“We have a suite of digital tools…that can pinpoint specific areas for improvement in the broker's process. This insight is the foundation of our continuous improvement culture, enabling our brokers to grow their businesses.
“Loan Market’s approach to compliance is about saving them time, keeping them safe and enabling them to grow bigger businesses.”