Providers of \u2018robo-advice\u2019 must meet the same education, training and best interest standards required of human advisers and should not be granted transition periods to comply with these requirements, according to the Financial Planning Association (FPA).<\/p>\n
Responding to Consultation Paper 254: Regulating Digital Product Advice<\/em> released by the Australian Securities and Investments Commission (ASIC), the FPA stated any financial advice provider had to meet the current level of organisational and personal compliance, and operate in the same regulatory environment as existing advice providers.<\/p>\n The FPA pointed to past statements by ASIC which indicated that its regulatory guidance was \u201c\u2026channel agnostic and applies irrespective of how the advice is being delivered\u201d and for the regulator to not unintentionally introduce new, lesser obligations for digital advice by providing separate guidance where suitable regulations already existed.<\/p>\n “The principal we believe which must be applied is that any provider of advice must be held to the same standards…”<\/p><\/blockquote>\n \u201cThe principal we believe which must be applied is that any provider of advice must be held to the same standards irrespective of the channel the advice is provided by. Ensuring organisational competence, compliance with legislated obligations and appropriate systems of monitoring the provision of advice are universal measures to ensure consumer protection\u201d the FPA said in its submission to CP254.<\/p>\n On the question of whether a responsible manager of a digital advice provider should need to comply with current and future educational requirements the FPA rejected any moves to adopt a lower standard than that applied to face to face advice stating there was no good policy reason for adopting lower standards.<\/p>\n The association asked that if the purpose of the new proposed higher education standards was to ensure a minimum quality of advice to all retail consumers how could that be achieved if digital advice providers were given lower training, competence and ethical standards than face to face advisers?<\/p>\n Continuing this theme of equal standards for all advice providers the FPA also requested that ASIC ensured digital advice providers complied with the fee disclosure statement and opt-in obligations under the Future of Financial Advice legislation, where ongoing service fees were being charged.<\/p>\n The FPA also advised ASIC to provide guidance around professional indemnity insurance stating that face to face advice was limited by the amount of clients an adviser can interact with while \u201cdigital advice has the ability to scale exponentially, and therefore potential damages requiring indemnity insurance could be considerably higher\u201d.<\/p>\n The submission also recommended that digital advice algorithms be tested to ensure they met the same best interest duties applied to traditional advice with the FPA reminding the regulator of the need for consistency.<\/p>\n “ASIC has already published material on the quality of advice expected of advisers…the same minimum standards are expected of digital advice providers\u201d<\/p><\/blockquote>\n \u201cASIC has already published material on the quality of advice expected of advisers, the FPA believes it is important to make clear that exactly the same minimum standards are expected of digital advice providers,\u201d the FPA submission said, calling for digital advice providers to be compliant from their first day of operation.<\/p>\n The FPA said this was necessary to avoid sending a message that regulations did not apply for some parts of the advice sector and to protect consumers who used digital advice services<\/p>\n \u201cIt has always been clear that providers must meet the training and competence requirements through some mechanism. Rather than providing a transition period where digital advice providers do not need to meet the training and competence standards, ASIC should instead ensure providers comply with their obligations,\u201d the FPA submission added.<\/p>\n","protected":false},"excerpt":{"rendered":" Providers of \u2018robo-advice\u2019 must meet the same education, training and best interest standards required of human advisers and should not be granted transition periods to comply with these requirements, according to the Financial Planning Association (FPA).<\/p>\n","protected":false},"author":3,"featured_media":33350,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,7],"tags":[4247],"class_list":["post-33341","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-technology","tag-feature","headers-new"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/33341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=33341"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/33341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/33350"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=33341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=33341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=33341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}