SFE Insight | Facing fax, by Anthony Rafferty

Anthony Rafferty, Origo CEO, discusses the use of antiquated technology in an age where fintech is delivering ever more innovative solutions.

A recent email missive from Mark Polson, MD of financial services consultancy The Lang Cat, caught my eye, focussed as it is on the continued use of the fax machine within the financial services industry.

I like Mark for a number of reasons – being Scottish he’s based just down the road from us in Leith; he brings a fresh, somewhat irreverent approach to his commentary on the industry; and he and his team produce some cracking white papers and reports (among other things), some of which we have commissioned from him.

In the email Mark highlighted that 62% of asset manager in the UK are still using fax machines – on the basis of ‘if it ain’t broke, don’t try to fix it’. 

This struck a chord, as one of the areas Origo has been trying to ‘fix’ is the Letter of Authority process, which causes financial advisers and their teams so many headaches. Why? Due to the antiquated operational processes used by financial services providers, with some still using, you’ve guessed it, fax machines.

A Letter of Authority is a form that an adviser sends to a provider, which contains the end client’s consent for the adviser to act on their behalf, usually to switch providers.

Depending on the number of providers the client is using, typically they will have to sign several individual paper-based forms, one for each provider, which are then posted or faxed to the provider concerned. It then enters their paper-based system, where it can wait weeks to be processed.

Meanwhile, the adviser is left not knowing where in the process the form is and so is forced to phone (and invariably left to wait on hold) in order to get an update. At the same time, the client – who more than likely is a new client to the firm and has had a swift and efficient onboarding process up to this point – is also left wondering what’s going on, and probably little impressed with their new adviser as a result. All of which is not good for anyone’s business or the reputation of the financial services industry in general.

Having changed adviser when I moved back to Edinburgh a few years ago, I found out about this the hard way. I was not impressed.

Origo has built the Unipass Letter of Authority service, which can digitise the process, thereby taking it from the 1990s, on a three decade journey into the 2020s.

It can be understood that providers may not be keen to invest in a process which accelerates funds going out of the door but at the end of the day, it’s the consumer’s money and they deserve to be able to transfer it when they want and in a reasonable time scale. We may not be talking hours here, due to the heavy regulation and legislation by which, quite rightly, providers must abide, but there is massive scope for improvement, and we have the technology in place to achieve it.

I am glad to say, we have providers who have seen the light and are working with us to improve their process. And in July the FCA will implement its new Consumer Duty rules, which puts the onus on financial services companies to always have the end consumer’s best interests in focus, to not do foreseeable harm and to have a primary goal of achieving good outcomes for the customer.

While much of the talk around Consumer Duty has been front-end facing, it applies to the back-office too and leaving an individual waiting weeks to be able to transfer their money to where they want to, potentially causing them to lose money in the process, will fall squarely under the Consumer Duty rules, so can no longer be ignored.