In its submission to Treasury in response to the Murray Inquiry’s findings, the FPA proposes that the “advent of online and/or automated advice tools…presents as many challenges and risks as it does opportunities” and calls for clearer regulatory guidance on these products.
Explaining that there are a wide range of robo-investment tools in operation – with varying degrees of application to strategic financial advice – the submission says ASIC’s traditional “technology-neutral” approach to regulation may no longer be appropriate.
“We are interested in what kind of regulatory regime would apply to automated advice tools,” the submission states.
“For example, Part 7.7A of the Corporations Act applies to both licensees and representatives of licensees, so a question of ultimate responsibility as between the adviser, licensee, and software provider arises where an adviser uses a faulty automated advice tool to generate poor advice.”
Without appropriate regulation, these tools may also be used as vehicles for in-built conflicts of interest such as self-space fees, hidden by the “impression of objectivity” that online algorithmic tools can give off.
The FPA officially recommends a “proactive and consultative approach” to risk assessment of automated investment products, arguing that ultimately a “co-regulatory approach should be adopted”.
At the same time, the submission concedes that “when used in a client-focused and professional manner”, robo-advice products may also provide opportunities and may help to “differentiate financial planning advice as a holistic offering from investment advice or other advice that does not incorporate strategic concerns”.
The submission also calls for a legal separation of ‘financial advice’ and ‘financial products’ in the Corporations Act to help structurally remove professional client-centric services from product-centric recommendation.
In addition, the submission backs the FSI proposal to introduce a conduct obligation for product manufacturers and distributors but rejects the proposal to effectively ban upfront life commissions.
Don’t worry about Bob. Bob consulted google for a recent medical condition and after hours of online searching and robo advice he concluded that he was in fact pregnant.
Gee, Bob, it is obvious that you have spent minimal time at the coal-face dealing with the public’s real financial planning needs. It is this one-dimensional “let the public choose” approach you offer up, that is part of the problem, not the solution. Most of the public requires an experienced adviser to help them wade through all the regulatory bulldust to get them to the heart of the matter. Much of the time spent by experienced advisers is spent preventing “the public” from shooting themselves in the foot. How will robo-adviser achieve that? Bob, if you are going to contribute positively to the general debate, make sure it is relevant and backed by having some experience of the industry, rather than a simplistic, armchair assessment arrived at after consuming the third glass of red.
The banks are moving to Robo advice for in house planners. ALL ADVICE TO BE GENERAL ADVICE
Reduces the cheque book liability !
Solution – ban GENERAL ADVICE. Clear up the abuses in risk – all advice whether from banks, IFA advisers and Industry funds should be on a personal advice basis
To leave it as it is expose consumers to unspeakable atrocities at claim
Are you listening ASIC ?
The only threat that robo-advice provides is making the financial planner redundant so no wonder they want it regulated. Let the buyer choose.