Fintech companies providing robo-advice tools should be bound by a code of professional conduct in similar fashion to that proposed for financial advisers, according to the Financial Services Institute of Australia (FINSIA).
In a submission filed with the Productivity Commission (PC), FINSIA pointed to the need for high levels of integrity to surround use of the term “advice”, even where that advice is provided via a financial services technology firm.
Dealing with the issue in the context of altering the terminology around “general advice”, FINSIA said the term “general advice” as currently defined by the Corporations Act had the potential to mislead consumers and suggested that “the term advice should only be used where it is given by a provider that is appropriately qualified and skilled to do so”.
“That is, the provider should meet an agreed standard of competence, and be bound by a code of professional conduct,” it said before suggesting that any replacement term for “general advice” have regard to the implementation of the Financial Adviser Standards and Ethics Authority’s (FASEA) professionalisation framework, particularly the proposed requirement that advisers be bound by a code of conduct that is monitored by a professional body.
“Where fintechs or incumbents provide advice through robo advice tools, they should demonstrate a comparable level of competence to skilled individuals who provide personal financial advice and likewise be bound by a code of professional conduct,” the submission said. “Further, fintechs should be required to disclose the level of personalisation for an individual’s financial circumstances that their tools provide, including disclosures about ownership relationships where a fintech is wholly or substantially owned by an ADI.”
FINSIA suggested that any replacement terms for “general advice” be tested with ordinary consumers.