OM's Securities Service has extended its outsourced service, with the aim of helping clients improve service to end customers, whilst remaining compliant with the Financial Services Authority (FSA) Know Your Customer (KYC) rules.
Developed to fully comply with guidelines from the Association of Private Client Investment Managers and Stockbrokers (APCIMS), OM provides stockbrokers and wealth managers with proactive, automated tools that ensure investment advice and decisions are in line with their customers' appetite for risk and investment objectives.
Demonstrating compliance with KYC requirements has become an acute issue among investment management firms. The impact of the recent bear market on personal investment portfolios has raised the question of how careful institutions have been matching investments with their customers' stated appetite for risk. To ensure that discretionary investment decisions or advice is appropriate to the interests of individuals, the FSA's KYC regulations were formed to put the onus on investment managers to prove that detailed data about customers is both gathered and acted upon.
FSA KYC regulations apply equally to firms of all sizes and OM now makes solutions, commonly only available to larger players, available to all. OM believes positive opportunities exist for firms willing to take advantage of the new KYC features. Elizabeth Sipiere, President of Banks & Brokers at OM, explains: "Today's investor is sophisticated and demanding, so knowing the customer has to mean more than ticking the regulatory boxes. Our service goes beyond achieving basic KYC compliance, with systems that proactively assist investment managers in gathering customer data, assessing risk appetite and formulating an appropriate investment strategy. A full understanding of the customer enables firms to deliver a higher quality of service, increasing customer loyalty."
OM's service takes a scientific approach, using qualifying data to generate highly accurate individual customer profiles encompassing risk and investment preferences. These enable investment managers to enhance risk compliance through improved construction and better management of bespoke, risk-balanced portfolios. By analysing extensive historical records, the service delivers sophisticated recommendations that precisely match individual customers' wishes and financial circumstances. Furthermore, automatic profiling of portfolios against industry averages means OM's service is able to assist with investment managers' customer queries about portfolio performance.
Customer profiling also means that firms can monitor their customers' investment behaviour. Augmenting standard account opening checks, the service alerts users of the system to suspicious investment activity and identifies irregular transactions, to help prevent money laundering.
KYC compliance is offered by OM as an integral part of its outsourced broking and wealth management services. This comprises front office capabilities, Internet platform and clearing and settlement services to help streamline operations, increase efficiency and reduce costs.