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Monday 21 March 2016

16-082MR ASIC consults on proposed guidance about 'robo-advice'

ASIC today released a consultation paper and a draft Regulatory Guide on regulating digital financial product advice (also commonly known as robo-advice).

ASIC Commissioner John Price said, 'ASIC is keen to see a healthy and vibrant digital advice sector. We see digital advice as having the potential to offer Australian consumers access to good quality, low-cost, financial advice.'

As part of its commitment to encouraging innovation that may benefit consumers, ASIC has developed draft guidance on the provision of digital product advice to retail clients. This guidance follows direct engagement with digital advice providers about their business models.  During that engagement it became clear that digital advice providers would benefit from additional ASIC guidance specific to digital advice.

ASIC's draft regulatory guide brings together some of the issues that persons providing, or intending to provide, digital advice to retail clients need to consider when operating in Australia—from the licensing stage (i.e. obtaining an Australian financial services (AFS) licence) through to the actual provision of advice.

ASIC is also seeking feedback on issues that are unique to digital advice businesses, in particular:

  • the organisational competence obligation that applies in a digital advice context; and
  • the ways in which digital advice licensees should monitor and test their algorithms.

'ASIC is committed to helping industry take advantage of the opportunities offered by robo-advice while ensuring that investor and financial consumer trust and confidence is not compromised. We encourage industry and other stakeholders to take part in this consultation process,' Mr Price said.

The closing date for submissions is 16 May 2016.


Consultation Paper 254 Regulating digital financial advice and draft Regulatory Guide 000 Providing digital financial product advice to retail clients


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 portfolio construction) to comprehensive financial product advice.

The provision of digital advice has grown rapidly in Australia since 2014, with a number of start-up AFS licensees and existing AFS licensees developing digital advice models. This growth is expected to continue.

ASIC's consultation paper and draft guidance coincides with the release today of the Australian Government's statement on Australia's FinTech future.

Last updated: 22/03/2016 12:00