It’s Not Too Late to Comply
A February MFDA review of the industry’s readiness for POS3 and CRM2 provided mixed results – while some dealers are ahead of the curve, the review “found incidents of both outright non-compliance and examples of half-hearted compliance”.
With POS3 only 90 days away and the last CRM2 reforms only 135 days away, the clock is ticking faster and faster.
What prevents dealers from implementing solutions to address this and other forms of regulation and compliance?
We think that the 2 biggest obstacles are Cost and Resources. The paradigm that adding new compliance processes is expensive and consumes significant operational resources is a standard industry reaction. But POS3 & CRM2 may in fact be different. When looking at cost, we believe that it is important to measure what you will need to start doing and also what you will stop doing. The introduction of Fund Facts at Point of Sale will necessitate an electronic transaction in the majority of all disclosure cases. So, yes, there is an incremental cost of implementing a solution to support this process. However, dealers will no longer be sending out printed Fund Facts and/or Prospectuses with trade confirmations – which will deliver a very significant cost reduction! Several of our clients actually implemented POS in advance of the regulation date because they see a cost advantage to this new regulation.
The other big obstacle is resourcing or committing the internal teams towards implementing these regulations. Again, the world is a little different in 2016 than in previous years when regulatory changes were extremely resource-intensive. There are solutions in the marketplace (including www.investorpos.com) that are very “Implementation Lite”. Cloud applications that support POS3 delivery that can be implemented in days or weeks depending on the degree of integration that is desired. Our partners at CRM2 Navigator have outsourced solutions that will help dealers meet the July 15th CRM2 requirement with minimal internal resource impact.
Changing business processes is never simple for any organization. However, the paradigm has shifted in terms of the availability of solutions to address POS3 and CRM2.