Too Many Firms Still Track Employee Registration Compliance Manually

    

Tracking employee compliance credentials including authorizations, registrations and licensing is a complex endeavor. Yet during the recent webinar A Better Way to Track Licensing and Registrations, 58% of people polled reported that they are still using manual solutions like spreadsheets to track compliance with employee certification regulations.

Using spreadsheets to track compliance with employee qualification and certification requirements sounds like a cost effective and simple way to keep track. But when you factor in all of the potential authorizations, registrations and licenses that are potentially applicable to employees of a financial services firm and all of the moving parts that go along with them, it’s a daunting task with much room for error.

At the very start, a new hire can’t work until they are fully licensed. And it’s a waste of resources for the firm if new employees are spending too much time on admin work when they could be focusing on learning what they need to be productive.

MCO_ARLWhen a firm brings an associate on board, they must ensure that new hire requirements have been vetted. Has the associate passed the requisite exams that evaluate their competency to do their jobs? Has their identity been verified and have background checks been sufficiently completed? Have any discrepancies been flagged and reviewed? Failure to properly manage the complicated process can lead to delays and omissions that mean employees are not able to generate revenue for the firm to full capacity right out of the gate – or worse that open the firm up to regulatory penalty and censure. For example, FINRA has fined a large financial institution $1.25 million for failing to conduct timely background checks to insure that prospective associated persons have not previously engaged in misconduct that would subject the individual to a statutory disqualification.

Managing employee license and certification requirements goes beyond the initial registrations, background checks and proof of successful completion of qualification exams to confirm that a new associate is fit to perform the role that they are hired for. Qualifications must be kept up to date with additional requirements including renewals and continuing education.

Firms that work across jurisdictions have multiple regulators - and multiple sets of differing requirements - making the process even more complex to manage. Multi-state and global firms will have associates who hold multiple licenses under multiple regulators, meaning differing requirements, exams, expirations and deadlines that must be owned, tracked and completed. Another recent action saw a UK broker and swap dealer fined $150K by the United States National Futures Association for failure to properly comply with qualification testing requirements, highlighting the very real risk for firms of failure to stay on top of cross-border regulatory requirements.

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Tracking doesn’t end with ensuring associates are qualified and up to date with their licenses, exams and continuing education. Firms must also make sure that they are keeping up with ad hoc changes to employee information throughout the year including address changes, name changes, and updates to job roles and responsibilities.

According to Sinead Egan, Product Manager of MCO’s Authorizations, Registrations and Licensing solution, she sees many firms struggle with keeping up with those ongoing changes and updates. In fact, when Sinead polled attendees during the webinar, 57% said their main ARL challenge was around tracking employee information.

Sinead notes that when firms are relying on employees to call or email compliance with updates and using spreadsheets and word documents to track the information, it’s challenging to make sure that changes are being received in a timely manner and no crucial information is falling through the cracks.

Challenges arise when firms are tracking different types of information via different formats. Using a variety of disparate tools to collect and maintain employee information often leads to compliance spending significant time chasing down employees for status updates, taking time away from valuable strategic activities. And when authorization, registration and licensing information is siloed, it’s difficult to see the big picture and understand where there are patterns of lapsed credentials, missing information and potential misconduct.

Automation simplifies the process for everyone. It makes it easier for employees to manage their obligations. When reps can view and update their personal information directly in the system and view action items like expirations, exam windows and continuing education status it makes it easier for them to adhere to their compliance obligations in a timely manner. Alerts that flag issues like a lapsed exam, a missing background check or an unexpected response on a questionnaire means that compliance teams can focus on exceptions and red flags, freeing up time to work on more strategic endeavors and reducing the risk of late notifications and fines.

The right compliance technology can interface with regulator’s systems like FINRA’s CRD/Gateway and Canada’s NRD, making the management of renewals, expirations and employee updates seamless.  When compliance technology integrates with HR systems like Workday to leverage existing HR data feeds, it eliminates the need for error-prone and time-consuming duplicate data entry. And it’s even easier for both the employee and for compliance when licensing and registration requirements can be managed in the same platform as other compliance activities like attestations and disclosures.

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Integrated technology also provides a single view of an employee’s overall compliance profile, allowing for automatic detection of patterns of red flags and repeat offenders. Customized questionnaires and rules and alerts can configure the system to meet the specific and unique compliance needs of the firm. A unified view of compliance allows firms to address real issues like lapsed licenses or incomplete registrations in a timely manner without having to look in multiple places for data.

Step away from the spreadsheets!

For more information on how MCO’s Authorizations, Registrations and Licensing solution allows firms to manage employee credentials easily and affordably, watch the webinar A Better Way to Track Licensing and Registrations and set up a demo to see the solution in action today.

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