The Australian Securities and Investments Commission (ASIC) will not require digital advice providers to comply with additional regulations stating current financial services laws and obligations are technology neutral and should apply in the provision of any form of advice.
The regulator made the statement in the introduction to Regulatory Guide 255 – Providing digital financial product advice to retail clients, which it has released following industry consultation earlier this year on how digital advice providers should be regulated.
“This 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. nondigital) financial product advice and digital advice are the same,” the Guide stated.
ASIC said the guide would be applicable to those wishing to provide digital advice, those businesses that provide hybrid product advice services and businesses that provide associated services to digital advice providers.
“This regulatory guide generally builds on existing ASIC guidance and does not introduce new regulatory concepts.”
Despite this ASIC said there were some areas which were unique to digital advice providers, including how organisational competency obligations within the Corporations Act applied to digital advice licensees, the ways in which digital advice licensees should monitor and test their algorithms and how they should comply with the best interests duty in the Corporations Act when providing ‘scaled advice’.
“ASIC supports the development of a healthy and robust digital advice market. In an environment where only around 20% of adult Australians seek personal advice, we think that digital advice has the potential to offer an attractive, convenient and low-cost advice service to retail clients who may not otherwise seek advice,” the Guide also stated.
ASIC Deputy Chair, Peter Kell said, “ASIC is committed to encouraging innovation that may benefit consumers. Our guidance on regulating digital advice is a useful starting point for those providing or intending to provide digital advice in Australia”
“ASIC supports the development of a healthy and robust digital advice market in Australia as a convenient, low-cost option for retail clients, and our guidance will help ensure that consumers can have confidence when they deal with digital advice providers.”
