A major financial software company has shut down claims ASIC’s digital advice guidelines will automatically increase compliance costs, but warned that “if compliance is not already baked into the system, there’s likely to be up to two years of redevelopment time required”.
Jan Kolbusz, founder and executive director of Decimal, said in a statement that ASIC Regulatory Guide 255 recognises "the difference between consumer focused robo-advice and enterprise digital platforms".
“Digital advice is about reaching out to every type of consumer to help them with any aspect of their financial life including savings, insurance, Centrelink, superannuation, retirement and investments,” he said.
“Robo-advisers target only those lucky consumers with spare cash to invest, typically into exchange-traded funds.
“While addressing consumer facing robo-advisers, RG 255 also provides financial institutions with a clear set of guidelines to make appropriate decisions about offering comprehensive digital advice solutions to their markets."
Mr Kolbusz added that compliance costs were a major inhibitor to offering traditional forms of financial advice to anyone other than those with wealth for investment.
“On average, compliance has accounted for around 30 per cent of the cost of advice,” he said.
“Part of the reason digital platforms are so compelling is the massive cost reduction capability. Digital advice needs to be infinitely scalable, meaning financial institutions pay the same amount to deliver advice to 100 customers as they do for a million or more.
“A more robust recording and data capture process is another attraction for banks and superannuation companies. If a customer engages via a digital channel, provided it’s on a truly enterprise and omni-channel platform, the customer still has the option to choose either telephone support or face-to-face advice. That way their entire journey is transparent no matter what channel they use.”
Decimal Software said “despite claims that ASIC’s regulatory guidelines for digital advice will increase compliance costs for providers, transparent risk and governance measures have always been at the core of true digital financial advice”.
According to Decimal Software the cost of not following ASIC's regulatory guidelines around digital advice could result in "up to two years of redevelopment time".
CountPlus firm AdviceCo has completed a tuck-in acquisition of Arch Capital, abs...
Banking and finance has been named as one of the sectors with the highest monthl...
EXCLUSIVE: Collapsed licensee Dover Financial is suing a number of former autho...