A web-based risk profiling company has criticised ASIC's regulatory guide to robo advice for failing to provide a “comprehensive operating manual for robos”, calling for advisers to “reach beyond” the limited guidance.
FinaMetrica said in a statement last week that ASIC’s Regulatory Guide 255 regarding digital financial advice left unanswered questions about the integrity of robo algorithms and investment standards.
“A failure in automated advice would undermine confidence and could deliver investor losses that easily dwarf the recent scandals over mis-selling by human advisers,” FinaMetrica said.
Director and co-founder of the company Paul Resnik said, "[ASIC] does not address in any useful detail many of the important issues about standards for robo-advice, such as knowing your client and investment suitability.
"Hopefully, robo operators will reach beyond the bare minimums in RG255 because all the rules that apply to human advice apply equally to robo advice" he said.
"Investment decision standards are barely discussed, yet they are at the heart of a good financial advice process and are at the heart of every robo.
"Robo operators need to give good advice, supported by robust defensible algorithms – it's not just about access and transaction speed," Mr Resnik said.
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