RG 255 potentially blurs lines
The corporate regulator's guidance that digital advice licensees are responsible for advice that does not comply with the law has the potential to blur lines when a traditional adviser uses technology to automate seemingly trivial jobs, Decimal believes.
The robo-advice platform solutions provider's whitepaper on the Australian Securities and Investments Commission's (ASIC's) regulatory guide for digital advice, RG 255, said accountability for digital advice providers were infinitely stricter than the rules that applied to traditional advisers.
Decimal said that RG 255 required digital advice providers to extensively log all activity, distinguish between advice delivered digitally and advice delivered by a person, and if a person was involved it should be clear exactly who did what.
Decimal pointed to the fact that while the Corporations Act that required licensees and advisers to keep "adequate records about their business", including copies of Statements of Advice (SOA) and Records of Advice (ROA), many organisations would struggle to present SOA and ROA files for the last 12 months.
"This rule is controversial because there's the potential for the lines to blur when a traditional adviser uses technology to automate seemingly trivial jobs such as updating a client's personal details, changing bank account details, issuing risk profiling questionnaires, booking meetings, and chasing up approvals," the white paper said.
"Traditional advisers may use traditional financial planning software like XPlan or Coin to note their actions and store manually-edited advice documentation but there's no formal requirement for them to do so.
"Furthermore, the lax rules provide no guarantee that the conversations and activities recorded are an accurate representation."
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
