Automating Compliance: Where Technology Helps – and Where It Doesn’t

Danielle Wasserman

As the regulatory expectations of financial service providers (FSPs) continue to expand, automation is becoming a day-to-day reality for these businesses. This article explores where technology can meaningfully support compliance – and where human judgement remains essential

For FSPs, automation is no longer a future consideration – it is already part of day-to-day compliance. From automated Fit and Proper tracking to real-time monitoring of clients for Financial Intelligence Centre Act (FICA) screening, as well as complaints and conduct indicators, technology is playing a growing role in how compliance work is managed.

At the same time, regulatory change is accelerating. Many FSPs are concerned that developments such as the upcoming Conduct of Financial Institutions (COFI) Bill and the Omni-Risk Return (Omni-RR) will place additional compliance demands on them – potentially beyond what smaller independent financial advisers (IFAs) feel able to manage. In this environment, automation is often seen not as a “nice to have”, but as a practical way to help manage increasing regulatory and business expectations.

While the role of automation in compliance feels inevitable, important questions remain: How far should compliance processes be automated? Where does technology add real value? Will all FSPs, including smaller IFAs, need to automate their processes? And where does human judgement remain essential, particularly in an outcomes-based regulatory environment? 

How automation is shaping compliance

Compliance automation in the financial services sector has moved well beyond basic task reminders or checklist tools. Today’s systems can consolidate information from multiple sources, generate alerts, flag potential areas of non-compliance and analyse data to identify trends or unusual patterns in advisor behaviour.

As compliance expectations increase, many compliance service providers and Compliance Officers (COs) are focusing on how automation can be used more effectively within FSPs – not to replace oversight, but to address routine tasks, allowing the business to focus on areas that strengthen consistency, visibility and control across key compliance activities.

By consolidating information into a single view and automating routine processes, these tools can reduce administrative effort, improve visibility across compliance activities and help identify potential issues or outstanding remedial actions earlier.

Automation is also being used to support a range of day-to-day compliance activities within FSPs, including:

• Declarations and attestations completed through automated platforms, reducing manual administration.
• Complaints tracked electronically to support ongoing oversight of Treating Customers Fairly (TCF) outcomes.
• COs using AI-enabled tools to assist with document reviews, comparing policies and procedures against current regulatory requirements and identifying potential gaps.
• Automated FICA screening and anti-money laundering (AML) processes, enabling faster client onboarding, ongoing sanctions and watchlist screening and more consistent monitoring of high-risk clients.
• In larger FSPs, automated verification processes and client-facing queries, helping teams manage higher volumes without losing oversight. 

The benefits of automation

When implemented thoughtfully, enhanced processes or automation can offer practical benefits for FSPs. In practice, these often include:

• Less time spent on manual tasks: Automated processes reduce repetition, duplication and administrative effort, freeing up time for higher-value work.
• More consistent compliance processes: Standardised workflows help ensure the same checks are applied across the business, reducing the risk of oversight.
• Improved data quality: Mandatory fields, standardised formats and real-time updates reduce the likelihood of missing or duplicated information. While compliance data can still originate from multiple sources, process flows and automation allows it to be linked and consolidated within a single system, making it easier to manage data quality, verify accuracy and maintain proper audit trails without relying on fragmented records.
• Earlier identification of potential risks: Continuous monitoring replaces periodic, diarised checks. Automated risk scoring and pattern detection can highlight issues – such as unusual replacement activity or changes in client profiles – much earlier than manual processes typically allow.

Together, these benefits support a more proactive approach to compliance, rather than one that is primarily reactive. 

The limits and risks

While automation can be a powerful support tool, it also has limitations that FSPs should be mindful of:

• Data quality remains critical: Automation cannot correct poor input. Inaccurate or incomplete data will still result in unreliable outputs.
• Technology cannot interpret context: Automated systems do not understand tone, intent or fairness. These elements remain firmly within the realm of human judgement.
• Integration and security challenges: Many FSPs rely on multiple systems. Integrating them can be complex and costly, and data security and privacy must remain a priority as information is consolidated.
• The risk of over-reliance: Automated outputs can create a false sense of security if they are accepted without review. System downtime, delayed updates or incorrect configurations can introduce new compliance gaps if human oversight is reduced too far.

It is also important to recognise that automation is not a one-size-fits-all solution. Many smaller IFAs already have simple, effective processes in place that meet their compliance needs, whether through well-managed spreadsheets or manual systems. Rather than investing unnecessarily in complex or costly automation, FSPs should assess whether their current systems are fit for purpose, both now and under COFI and the Omni-RR, and whether they support accurate data collection and meaningful interpretation.

In addition, where automation is appropriate, this does not necessarily mean building systems internally – third-party tools and service providers can often offer a more practical and cost-effective way to support specific compliance activities. 

Why human judgement still matters

These limitations highlight why human judgement remains central to effective compliance. There are clear areas where automation should never replace human decision-making.

Advice suitability, fairness assessments and regulatory interpretation all require context, ethical consideration and an understanding of individual client circumstances. This is particularly important under COFI, which is outcomes-based rather than rules-based. Concepts such as fairness, customer harm and culture cannot be reduced to automated tick-box exercises.

The Financial Sector Conduct Authority (FSCA) also expects ongoing human oversight and accountability to be “built into” technology, meaning that responsibility for compliance outcomes cannot be automated away. 

Changing roles, not disappearing ones

As automation becomes more embedded, certain compliance tasks will inevitably change. Data capturing, routine checks and first-level administrative processes are likely to be reduced or streamlined.

However, key roles remain essential. COs, Key Individuals (KIs) and advisors all perform functions that rely on judgement, interpretation and decision-making. Rather than replacing these roles, automation can support them by reducing administrative burden and enabling a greater focus on oversight, governance and conduct. In addition, administrative and support staff remain an important part of the compliance function, but their roles may shift away from manual data capture and document chasing towards coordination, quality control and supporting compliance processes.

In practice, this allows teams to spend more time analysing data, engaging with advisors and clients and strengthening governance frameworks. 

Preparing for COFI and the Omni-RR

The expanded data and reporting requirements under the Omni-RR place a much greater emphasis on how FSPs collect, manage and evidence compliance information, making automation and process efficiencies particularly relevant.

Automated systems can help validate and pre-populate data fields, flag missing information and maintain audit trails. This allows the business and COs to spend less time gathering data and more time interpreting what it reveals.

However, the outputs, activities and actions that follow from this interpretation and understanding remains firmly human. Assessing customer harm, conducting root cause analysis, reviewing advice quality and determining appropriate remedial action all require context and judgement. Automation provides the evidence, while COs support the business in using that evidence by providing insights and recommendations on next steps – whether to address risk or identify opportunities.

Used effectively, more efficient or automated process can help businesses gather and better understand their data, strengthening governance by highlighting risk areas, supporting targeted interventions and demonstrating a proactive approach to compliance and conduct risk management.

That said, the Omni-RR does not necessarily require all FSPs to automate their compliance processes. Its requirements are expected to be applied proportionately, taking into account the size, nature and complexity of the FSP. This means that while larger or more complex businesses may require more structured or automated approaches to manage higher volumes of data, smaller IFAs may not be subject to the same level of reporting complexity. 

Looking ahead

Over the next few years, FSP compliance is likely to become more data-driven and less manual, allowing compliance professionals to focus more on oversight, governance and risk prevention.

The ability to work confidently with data will increasingly become an important skill for compliance professionals and businesses alike. Importantly, automation of data and tasks should not be seen as replacing compliance expertise, but as a tool that allows it to be applied where it matters most – guiding behaviour, improving outcomes and supporting sustainable compliance in an increasingly complex regulatory environment.