ASIC Publishes Guidance on Regulating Digital Advice for Retail Investors

ASIC has issued its latest guidance to address some of the issues that digital advice providers need to consider.

Recognising that digital advice continues to be a developing area, the Australian Securities and Investment Commission (ASIC) today released its guidance on providing digital financial product advice for retail investors.

The guide, entitled “Providing digital financial product advice to retail clients” (RG 255), brings together some of the issues that digital advice providers need to consider when operating in Australia, covering areas from the licensing stage through to the actual provision of advice.

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Digital financial product advice

RG 255 also includes guidance on some issues that are unique to digital advice, such as how the organisational competence obligation applies to digital advice licencees and the ways in which digital advice licensees should monitor and test their algorithms.

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Commenting on the new guidance, Deputy Chairman Peter Kell said: ‘ASIC is committed to encouraging innovation that may benefit consumers. Our guidance on regulating digital advice is a useful starting point for those providing or intending to provide digital advice in Australia.”

He continued: “ASIC supports the development of a healthy and robust digital advice market in Australia as a convenient, low-cost option for retail clients, and our guidance will help ensure that consumers can have confidence when they deal with digital advice providers”.

Background

Digital advice, also known as robo-advice or automated advice, is the provision of automated financial product advice using algorithms and technology and without the direct involvement of a human adviser. It can comprise general or personal advice, and range from advice that is narrow in scope to comprehensive financial product advice.

ASIC fully supports the development of a healthy and robust digital advice market and its latest guidance seeks to address this area. In March 2016, ASIC released “Regulating digital financial product advice” (CP 254) which attached a draft Regulatory Guide on regulating digital advice and sought feedback on a number a proposals in relation to its draft guidance.

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