Transforming the LOA process will make it fit for future purpose

Origo CEO, Anthony Rafferty, provides his views on the current state of AI within the FS industry - "It only takes a brief browse of the headlines on any given day before you will quickly spot a story about artificial intelligence."

"This is absolutely a subject that should be talked about and debated, given AI’s potential to either transform the workplace and society as we know it, or mark the end of humankind, depending on which side you land on.

But here in the financial services industry we are often guilty of being distracted by the latest shiny new thing. And AI is very big and very shiny, certainly compared with some of the seemingly unending tech issues that have been hanging around the sector for far too long.

The reality is, it is unlikely that financial services will be able to fully harness the benefits of AI until its more fundamental technology is up to scratch. That would be like building a state-of-the-art ‘house of the future’ on some seriously shaky foundations.

Laying a solid LOA foundation

This may not be the glamorous side of technology, but at Origo we have built our reputation on being rather like a reliable plumber working away in the background to fix leaks (and there have been many over the years) in the industry’s pipework. You’ve got to have the correct plumbing in place before you can add the shiny taps.

And that is why we are getting behind FT Adviser’s 2025 campaign to properly tackle the much-beleaguered issues with Letters of Authority, once and for all. It feels almost absurd that we are now in the age of AI while also living in a world where an entire industry full of smart people has so far found it impossible to create a way for client money to move freely, while still reducing fraud and scams. But all that is about to change.

Advisers and their clients can be left waiting between 46 and 60 days for this process to complete

An LOA is a key part of a person’s first interaction with their financial planner – and probably their first ever experience of receiving advice – during the client onboarding process. So imagine the initial impression they are left with should they encounter the delays and uncertainty that advisers commonly experience when processing LOAs. Previous research of 200 advisers carried out for Origo by the lang cat found that advisers and their clients can be left waiting between 46 and 60 days for this process to complete, in a worst-case scenario.

If that is not bad enough, nearly 75 per cent of these advisers also said they sometimes question whether they could even take on a client if their investments were with certain providers (directly attributed to the ability to extract the information required to service them). That was back in late 2023 and, unfortunately, issues remain.

It is painful for all involved – the client of course, the adviser certainly and providers too, causing a drain on everyone’s time and resource, while ultimately raising costs for everyone caught up in the process.

Radical action required

There has been some welcome progress to make parts of the LOA process more efficient through digitisation and this should be applauded. But progress can only go so far when much of the industry is still hooked on existing antiquated processes, which are also inconsistent with others in the market. And the absence of direct intervention from the regulator on this specific issue means there has been no real push to change.

Perhaps the answer is not to try to work within the confines of the existing, highly dysfunctional, process but to revolutionise it entirely. In the spirit of our original purpose of connecting the financial services industry for the benefit of everyone, we believe it is entirely possible to get the LOA process to a place where everything flows through each touchpoint and party involved.

The results will be radical improvements to timescales and consumer outcomes, both of which are exactly the direction the Financial Conduct Authority wants to see the industry moving in under consumer duty.

That’s our mission for 2025 and we hope to bring as much of the industry as possible along with us. Let’s finally make painful LOA processes a thing of the past so we can turn our attention to the technology of the future."

Published on: ‘Transforming the LOA process will make it fit for future purpose’ - FTAdviser