ASIC Seeks Input on Robo-Advice Policy

The Australian Securities and Investment Commission (ASIC) will seek to offer regulatory guidance to robo-advice providers after it announced it was seeking industry feedback on how providers can monitor and test the process underneath the advice.

ASIC also stated it was looking at how robo-advice providers would comply with the best interest duty under the Corporations Act when providing scaled advice adding that additional guidance had been requested by robo-advice providers.

“…it has become clear that industry would benefit from additional guidance that deals specifically with digital advice”

“ASIC has spoken with a number of AFS licensees and their authorised representatives that provide digital advice to retail clients. We have also spoken with financial technology (fintech) start-up businesses that are considering whether to become an AFS licensee or an authorised representative of an AFS licensee. From these discussions, it has become clear that industry would benefit from additional guidance that deals specifically with digital advice,” ASIC stated.

As part of this work ASIC has released a consultation paper and a draft Regulatory Guide on regulating digital financial product advice to retail clients.

While it was seeking feedback on how digital advice licensees should monitor and test their algorithms, and provide scaled advice, ASIC also stated it was interested in the organisational competence obligation that applies in a digital advice context.

The corporate regulator said the draft regulatory guide would cover from the licensing stage through to the actual provision of advice but would be based on current regulations for the provision of advice.

“Our draft regulatory guide generally builds on existing ASIC guidance and does not introduce new regulatory concepts. This is because the law is technology neutral, and the obligations applying to the provision of traditional (i.e. non-digital) financial product advice and digital advice are the same,” ASIC stated in the consultation paper.

Submissions close on 16 May with ASIC expected to release it guidance document in August 2016.