ASIC guidance on digital advice

01 February 2017

Young woman sitting on sofa in living room and using tablet.

Dr. Michelle Cull

Dr Michelle Cull joined Western Sydney University with over 10 years' experience in various financial and management accounting positions in ASX100 companies. She is currently the Director, Academic Program - Accounting.

The industry regulator has released its guidance on providing digital financial product advice for retail investors: Providing digital financial product advice to retail clients (RG 255).

ASIC’s guide brings together some of the issues that digital advice providers need to consider when operating in Australia – from the licensing stage through to the actual provision of advice.

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

In announcing RG 255, ASIC Deputy Chairman Peter Kell says: “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.

“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.”

Kell acknowledges that digital advice continues to be a developing area of the industry which requires continuing observation.

RG 255 stipulates that, under the Corporations Act, existing AFS licensees wanting to provide digital advice will need to consider whether their current licensing arrangements enable them to do so.

Start-up fintech businesses wanting to provide digital advice must apply for their own AFS licence or become an authorised representative of an AFS licensee.

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