ASIC's bar too low on robo-advice
The Australian Securities and Investments Commission (ASIC) has been playing catch-up and is guilty of setting the bar too low on robo-advice, according Adviser Intelligence founder, Jacqui Henderson.
In a blog post published this week, Henderson argued that the rules around digital automated advice did not go far enough.
"My view is that the rules around digital automated advice must be tough. Enforceable. Not an opt-in or a 'nice to have' recommendation," she said.
"Data and algorithms underpinning advice must be subject to scrutiny by qualified experts. There is too much at stake for Australia not to get it right and lead the world with best consumer practice in this emerging area."
Henderson pointed to ASIC's recently-released regulatory guide RG 255 as containing loopholes and entailing low minimum standards stating that the "RG255 guidelines give an uninspired insight into the catch-up thinking at ASIC".
"Its views expressed in RG255 on digital advice show a low-bar for some of the high claims being made about all things 'robo' in the industry," she said.
Henderson pointed to the way in which RG 255 had outlined organisational competence obligations with respect to digital advice licensees and the ways in which those licensees should monitor and test their algorithms.
"Is self-regulation good enough?" she said.
"The financial services industry, least of all the major institutions with existing reputational issues of their own, can ill-afford a series of unforeseen robo-advice 'car wrecks' and a roadway littered with the destruction of client wealth and customer livelihoods."
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