The last couple of weeks were very challenging and turbulent for all industries and segments across the globe due to the ongoing COVID-19 pandemic.

Financial services are not only experiencing the challenges of COVID-19 but also highly-volatile markets.

Nevertheless, the current situation has left businesses to rethink their ways of operating and whether alternative methods might lead to the same quality of service.

The major challenge for compliance professionals in the past weeks was that of ensuring that the ‘new normal’ is an equilibrium between the business needs of a company and the service it provides to customers. The pendulum between the business needs and clients are the various regulations that regulate the financial services industry.

It is essential that companies ensure that all processes adopted remain in line with the obligations vis-à-vis the regulations. Striking this balance in times of a pandemic can be quite challenging too.

In view of this, compliance teams had to ensure that staff members were fully equipped with the necessary systems that allow them to provide a service to their clients with minimal disruption.

Embracing the challenges

It is no news that one of the key challenges for financial institutions is the level of regulatory requirements. Sometimes, in order to comply with regulatory requirements, financial institutions need to look at data through different regulatory lenses. Therefore, all regulatory obligations imposed on companies, which vary from MiFID II requirements to Anti-Money Laundering (AML) requirements, must still be fully adhered to even in times like these.

One of the major challenges in the last couple of weeks was achieving the right balance between regulatory obligations, more specifically AML obligations on the company and customer due diligence (CDD) requirements. CDD is the process through which companies obtain information and documentation about their clients for the former to be able to assess the risks that the client may impose on the company.

Due to social distancing measures recommended by health authorities, service providers had to tweak their operational processes and move towards digital methods and non-face-to-face communication with clients. The clients had to adapt to this change too. Despite the fact that non-face-to-face communication was an option already available pre-COVID-19, the difference now is that non-face-to-face interactions are mandatory. Like always, some people will be more than happy to adapt while others might be less willing to do so.

One must note that the majority of the financial services firms in Malta have embraced the challenges brought by COVID-19 quite rapidly. However, it is all useless if clients do not embrace the changes too.

Clients must always keep in mind that requests by their investment advisers during non-face-to-face communication − which are sometimes higher when compared to face-to-face meetings − are not only serving as a safeguard for financial services firms but also for themselves. This applies both for communication over the phone as well as for virtual meetings. In view of this, clients are deeply encouraged to embrace the current challenges and to not fear changes. One may also realise that digital change has its positive aspects.

Discussing financial needs over the phone with an investment adviser rather than in person will lead to the same result. The only difference would be that your investment adviser would be unable to offer you a coffee!

Furthermore, clients may also realise that electronic systems of communication such as e-mail rather than traditional post will not only help the environment but will also give them instant access to communication without the need to wait for the physical delivery of mail. This will also provide clients with easy future reference to communication received from the investment advisers.

While local health authorities have indicated that some restrictive measures might be lifted in the coming days, the ‘new normal’ might still last for weeks or even months and social distancing will remain of utmost importance.

Therefore, the current adjustments to the operational practices within the financial services firms might last for months too. In view of this, all parties involved in the chain should ensure that this change is managed healthily. Nevertheless, as we always advise, investors should always consult their investment adviser in order to receive the best possible guidance. 

One should keep in mind that adapting to a new way of interaction between clients and financial services professionals in a situation where physical interaction is not available might help people realise that after all, change is good.

This article was prepared by Maria Saliba, AICA, B Com (Hons) (Banking and Finance), head of compliance at Jesmond Mizzi Financial Advisors Limited. This article does not intend to give investment advice and the contents therein should not be construed as such. The company is licensed to conduct investment services by the MFSA and is a Member of the Malta Stock Exchange and a member of the Atlas Group. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. Investors should remember that past performance is no guide to future performance and that the value of investments may go down as well as up. For more information, contact Jesmond Mizzi Financial Advisors Limited of 67, Level 3, South Street, Valletta, on 2122 4410 or e-mail maria.saliba@jesmondmizzi.com.

www.jesmondmizzi.com

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