Myriad of regulation issues in robo-advice
The Australian Securities and Investments Commission (ASIC) has voiced its support for the provision of automated, or robo-advice, but warned that it brings its own unique regulatory challenges and issues.
In a speech at the Women in banking and finance business series luncheon, ASIC Chairman, Greg Medcraft, said the same laws and obligations for giving advice should apply to digital advice.
"We see the legislation is technology neutral in the obligations it imposes. We want to better understand robo-advice models. We need to understand the risks and issues that underlie robo-advice," Medcraft said.
Medcraft said robo-advice could potentially offer a low-cost advice service to consumers and could enhance compliance and record keeping, and decrease conflicts of interest.
However, he said ASIC would focus on how robo-advice providers comply with the best interests' duty, how they build and test their algorithms, training, and competency requirements for those behind the robo-advice models, and the adequacy of the compensation framework of a robo-advice operator.
"Digital advice is growing rapidly and we will be working with operators to ensure they are getting it right and that investors can have trust and confidence in the advice they receive," Medcraft said.
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