A financial services provider’s modern slavery compliance

Overview

Preparing an MS statement

Under the Modern Slavery Act (2018), any entity operating in Australia with revenue of more than $100 million must submit a modern slavery (MS) statement by 31 December each year. As a qualifying business, the financial services provider is expected to prepare an MS statement outlining any risks they’ve identified within their operations and supply chain, along with actions they’ve taken to mitigate those risks. This statement must be approved by the IHL Group Board, signed by a Board Director and provided to the Australian Government by year end. In their second year of reporting, the financial services provider experienced setbacks to the progress of their MS compliance program.

460degrees recommended using an Enterprise Risk Framework approach to help the financial services provider meet their MS requirements, provide recommendations for future steps and adopt a stronger risk-based framework to demonstrate that the financial services provider is now taking a maturity approach to MS compliance.

ABOUT

The financial services provider

Helping Australians secure their financial future since 1846, the financial services provider strongly believes in making financial advice accessible for all.

As an ASX top 200 company with more than $200 billion in funds under management, administration and advice, they’ve become one of Australia’s largest financial companies.

Background

MS compliance journey

The financial services provider commenced its MS compliance journey in late 2020, issuing their first-year Modern Slavery Statement by March, in keeping with legislation.

Despite their commitment to taking a positive and proactive approach to MS, restrictions related to the global COVID pandemic impacted their ability to meet all of their programs. This made reviewing the provider’s compliance and approach to managing, understanding and addressing MS risks pivotal in Year 2 of their MS compliance program.

Challenges & Setbacks

With the setbacks experienced, the financial services provider was still overwhelmed by the task of working through the first stages of their compliance program, making future steps seem unattainable: 460degrees identified four main challenges impeding the provider’s success:

  1. A lack of centralised procurement practice – with no dedicated team in charge of suppliers, the procurement function was fragmented and siloed across divisions. This meant data on MS was not easily accessible within the organisation, causing gaps in both quantity and quality.
  2. Delayed and incomplete supplier lists – over 300 suppliers lacked full and correct business and contact details at the start of the project. It routinely took weeks to pull data together and there was a high risk of not being able to find the right person to facilitate assessment.
  3. Delays in access to communication tools – it took more than a month to provide the team access to the MS email account.
  4. Availability and cooperation of the financial services provider’s staff – for Year 1 reporting, 460degrees had support from the financial services provider for the development and approach to their suppliers.

“This was difficult to sustain in Year 2. We believed targeting Tier 2 was not feasible, as managing Tier 1 suppliers was still our focus. Additionally, the high numbers of Tier 2 suppliers would have made the assessment process quite challenging”

Procurement Manager at the financial services provider

Solution

Identify and validate suppliers

As the team brought on to support the financial services provider’s MS reporting and compliance, 460degrees collaborated with the provider procurement leads to identify and validate available information on suppliers for Year 2 reporting. The procurement team provided a list of eligible suppliers (according to associated spend amount) which was validated against Year 1 reporting and several other base factors such as business name, industry, geographic region and available contact information. This required a considerable amount of analysis, cleansing and improvement of the data to ensure the correct suppliers were selected for assessment, all conducted by 460degrees.

Result

Shift in spend capture

The goal was to increase the total spend with suppliers that responded to the financial services provider’s MS requirements, while reducing total spend with non-responders. This was certainly achieved: in year 2, the total spend associated with responders ($65M) was higher than the total spend with suppliers who did not respond ($55M). With Year 1 reporting a $36M spend with responders and $135M with non-responders, this obvious shift in spend capture and assessment represents a significant achievement.

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