ASIC regulatory guidance a plus for robo-advice

ASIC's regulatory guide on digital financial product advice, RG 255, has the potential to prevent advice failures and grow confidence in the advice industry if properly implemented, according to software firm Decimal.

ASIC regulatory guidance a plus for robo-advice

Killian Plastow

Last Updated: 01 November 2016 Published: 01 November 2016

In a whitepaper titled 2017 State of digital advice transformation, Decimal said that RG 255 was "important for many reasons but primarily because it has the potential, if implemented properly, to prevent a digital advice scandal from occurring".

"RG 255 is important because it gives digital advice providers direction and guidance but it also gives ASIC a benchmark and standard to evaluate them. Without rules and guidelines, ASIC can't be an effective regulator," the company said.

In particular, Decimal cited the strict expectations around logging, storing and retrieving client data where digital advice has been provided, as being of immense value.

"RG 255 requires digital advice providers to extensively log all activity, distinguishing between advice delivered digitally and advice delivered by a person. If a person is involved, it should be clear exactly who did what," Decimal said.

Decimal noted that "at no other time in financial services history has ASIC been able to release guidance" without lobbying from various industry bodies and stakeholders, and that RG 255 will likely "stir more Australians to seek advice."

"From a consumer perspective, knowing there are checks and balances in place designed to protect them against poor or inappropriate advice and rogue operators builds confidence," the company said.