abrdn’s ‘bloody frustrating’ digital advice battle

The lack of regulatory confirmation and ambiguous framework is making it difficult for financial services firm to move into the digital advice space.

Speaking at a Financial Services Council (FSC) event in Sydney last week, abrdn managing director, Brett Jollie, discussed the firm’s digital advice approach. 

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While this is already in place in the UK, he bemoaned the lack of clarity from the Australian Securities and Investments Commission (ASIC) in the Australian market.

“We believe we have a competent solution but we can’t get it to market because the regulator won’t confirm if it is suitable or not,” he said.

“In the UK we have a solution and used the FCA [the UK’s Financial Conduct Authority] sandbox, they worked with us and provided feedback to demonstrate if we were compliant. To have that confirmation from the regulator … compared to in Australia where ASIC doesn’t provide any feedback or support on developments.

“They were happy to engage but wouldn’t say yes or no, they said they didn’t provide that guidance. We were nudging them and got nothing, it was really bloody frustrating,” he added to Money Management.

Since then, the government had released its formal response to the Quality of Advice Review that includes the removal of the safe harbour steps from best interest duty. There would also be a consultation on how the proposals would operate under a digital advice model.

Speaking to Money Management, Jollie said: “While implementation of 14 proposals from Michelle Levy’s Quality of Advice Review is a positive outcome for consumers, the government needs to go a step further in implementing the remaining eight proposals, particularly the proposals to broaden the definition of personal advice and implementation of the concept of ‘good advice’. 

“Removal of the safe harbour provision will support the development of digital advice solutions in Australia as it removes much of the ambiguity that exists today in satisfying the best interests duty in digital solutions. 

“However real progress will only be made when the proposals to broaden the definition of personal advice and implementation of the concept of good advice are incorporated into the regulatory framework.”

abrdn was a member of the recently launched association of digital advice providers, led by head of retirement and digital innovation Jason Nyilas. As well as abrdn, it also includes MoneyGPS, Advice Intelligence and Ignition Advice.

“It was about coming together with those other firms that we have come into contact with over the year, we are all like-minded and want to advocate for positive and sensible regulation around advice. We are not looking for special regulation, we just want it to allow for digital advice,” Jollie said.