CRM II: How Banks Can Stay Compliant Yet Flexible

  • Igor Djurdjevic, Business Practice Manager at Appway

  • 19.05.2017 08:15 am
  • Compliance , Banks

Since 2014, the Client Relationship Model II (CRM II) regulation has become a hot topic in the Canadian financial services industry because of its influence on banking practices in Canada.

CRM II aims to protect investors from false investments and provide them with comprehensive information about fees and the performance of their investments. A part of a global shift towards increased disclosure and transparency in the banking industry, its European and U.S. counterparts are MIFID II and the Dodd Frank Act, respectively.

More than ever before, the bank is responsible for making sure investors receive specific and relevant details about their accounts. Banks that fail to follow due diligence practices when it comes to customers and transactions are vulnerable to scrutiny and litigation. For banks to ensure they stay in line with CRM II, they must provide investors with comprehensive account information through various channels: statements and confirmations, mandatory biannual reports, and conversations with relationship managers. Banks also need to document the entire advisory process. To guarantee full disclosure from the beginning, banks should additionally make sure that the investment time horizon, fee set up, and product selection take place during client onboarding.

In the onboarding phase and throughout the client-advisor relationship, clients need to feel they can trust the information being given to them. CRM II undoubtedly fosters more accountability in the financial services industry and raises clients’ awareness of their investments. By following its guidelines, advisors can offer their clients sound advice and products that fit their needs. This creates long-term value for banking customers and, in turn, revenue for banks.

It’s crucial that banks adapt in this new era of transparency. Once banks embrace CRM II, they will be better than ever at gaining their clients’ loyalty and growing as a company (see whitepaper, Transforming Compliance: From Cumbersome Reality to Increased Efficiency). With the right digital onboarding solution, the relationship manager can use automated tools to increase transparency and ensure compliance, all while advising the client in their best interest. Appway Onboarding’s flexible solution allows banks to easily adapt to CRM II regulations and still maintain their focus on the customer.

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