With robo-advice expected to increasingly offer Australian consumers access to cheap financial advice, a consultation paper on regulating the sector has been released.
ASIC’s consultation paper and draft regulatory guide on digital financial product advice, commonly referred to as robo-advice, aims to ensure industry can flourish the emerging market while not compromising consumer trust.
“ASIC is keen to see a healthy and vibrant digital advice sector. We see digital advice as having the potential to offer Australian consumers access to good quality, low-cost, financial advice,” says ASIC Commissioner John Price.
The draft regulatory guide brings together some of the issues that persons providing, or intending to provide, digital advice to retail clients need to consider when operating in Australia – from the licensing stage through to the actual provision of advice.
ASIC is seeking feedback on issues that are unique to digital advice businesses, in particular the organisational competence obligation that applies in a digital-advice context, and the ways in which digital advice licensees should monitor and test their algorithms.
“ASIC is committed to helping industry take advantage of the opportunities offered by robo-advice while ensuring that investor and financial consumer trust and confidence is not compromised,” Price says.
Robo-advice is the provision of automated financial product advice using algorithms and technology and without the direct involvement of a human adviser.
It can comprise general or personal advice, and range from advice that is narrow in scope (e.g. advice about portfolio construction) to comprehensive financial product advice.
The closing date for submissions is 16 May 2016. NIBA will consult its members before preparing a submission.