In a new white paper, Compliance Myths About Digital Advice, Ignition Advice head Craig Keary said a common perception in the financial services sector that digital advice does not meet the compliance requirements of local regulators is not true and that, in fact, there are clear guidelines for it.
“… the reality is that scaled advice is permitted by law and indeed is encouraged by ASIC,” Mr Keary wrote.
“ASIC has provided considerable guidance on how to provide single or limited-issue advice, and that guidance is appropriate whether the solution is human or digital.
“According to ASIC, the same rules apply to all personal advice on a particular topic, whether it is comprehensive or limited in scope. However, what must be done to meet the legal requirements, including the best interests duty and related obligations, can be ‘scaled up’ or ‘scaled down’ depending on the nature of the advice.”
Mr Keary said that the evolution of digital advice within the advice industry should be embraced and that properly developed digital advice can help businesses meet their requirements.
He encouraged advisers to recognise the value of digital advice solutions, as it will attribute to reduced operational and regulatory risk and cost spent on compliance.
“Ultimately, digital advice helps more people access affordable, flexible and high-quality advice when they need it most — closing the advice gap and increasing societal financial wellbeing,” he said.
Mr Keary’s comments come months after the Financial Planning Association of Australia (FPA) revealed it is working on a digital SOA alongside ASIC that would “effectively have no paper involved at all”.
A due date on the digital SoA is yet to be announced.
Simple fact is digital advice will always fail the current regulations, unless they get a carve out like the union funds with intrafund advice. The government and ASIC have made advice so far out of reach of the majority of Australian’s they need a solution, and that most likely will be extended the carve out to robo advice. Once they carve out is granted the banks will be back in the advice space in a second.
ASIC love digital advice, they are hoping it hides the consequences from them forcing thousands of actual people out of financial planning. Some of the recent fines in the USA are however interesting.