Financial services technology provider GBST is calling for the FSA to regulate back-office software providers.
The firm says back-office systems carry out important tax calculations and produce client statements and should therefore have their technology regulated.
Wealth management division chief executive Robert DeDominicis says there are some software firms that are not backing up their data or paying due attention to potential risks.
DeDominicis says the FSA should follow the Australian regulator, the Australian Securities and Investments Commission, in taking a greater interest in the software used to power platforms.
He says: “Regulation is only carried out from a transactional point of view at the moment but technology is becoming more integrated.
“Back-office systems are where statements are being produced and taxes are being calculated and should be regulated.”
DeDominicis claims many software companies do not have sufficient data back-up to protect themselves in the event of a system failure.
He says: “A lot of firms think it will never happen to them and this shows a lack of foresight. In Australia, the regulator is becoming more interested to see how software is managed and is making sure any risk to clients and investors is mitigated. It is another level of bureaucracy but it is there to make sure things work properly.”
Plum Software managing director Ann Dempster says: “I would welcome anything that ensures we are doing things in the right way. However, it is still up to advisers to make sure they are using the right tools.”