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Screenshot of a breaking news alert e-mail from Q2 2017
Australia financial regulator ASIC has released guidance on regulating digital advice to retail investors and traders.
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 (e.g. advice about specific traders or portfolio construction) to a comprehensive financial plan.
The provision of digital advice has grown rapidly in Australia and elsewhere over the pat few years, with a number of start-up Australian financial services (AFS) licensees and existing AFS licensees developing digital advice models. ASIC expects this trend and growth to continue.
Overall, ASIC supports the development of a healthy and robust digital advice market in Australia. In an environment where only around 20% of adult Australians seek personal advice, ASIC believes that digital advice has the potential to be a convenient and low-cost option for retail clients who may not otherwise seek advice.
Australia’s financial services regulatory regime is principles-based and ASIC as such does not prescribe the steps that an AFS licensee needs to take to comply with the law. However, ASIC has issued a detailed guide for those providing robo advice to help establish what is allowed, what is not allowed, and what are acceptable practices.
ASIC’s full guidelines on providing digital financial product advice to retail clients can be seen here.