The research – which was conducted by financial information company Boring Money on behalf of the Financial Services Consumer Panel, a statutory body that advises the UK financial regulator – found that robo-advice providers are currently providing insufficiently pro-consumer services on a number of fronts.
It concludes that “many online investment firms” failed to clearly communicate whether the advice provided was regulated or not, to disclose relevant costs and charges and to use language that consumers might reasonably understand.
The consumer body calls on the Financial Conduct Authority (FCA) to enforce existing regulations governing online investment tools as well as to develop a framework for product providers to adopt language that is less reliant on complex industry jargon.
“More and more people with relatively small amounts of money to invest are turning to online investment services, many of them with cash they have released under pensions freedoms,” said the consumer panel chair Sue Lewis.
“They need to know exactly what they are buying, what it costs and what happens if something goes wrong. Most online firms are not giving them this information clearly, most of the time. It is obvious these firms do not have a clue how to communicate in a way their customers understand. The FCA should enforce its rules in this area vigorously, whether firms are giving regulated advice or not, before more people who can ill afford it lose out.”
The report comes as Australian authorities announce a regulatory sandbox approach to fintech licensing.
