Honeymoon over for robo advice
By Tom Carnegie, 24 May 18
The UK’s Financial Conduct Authority (FCA) has made it clear it will hold robo advice firms to the same high standards as human advisers, with experts saying the honeymoon is now over for those trying to curb the rules.
Rather than allow for cheap and alternative services, Mifid II expressly requires that direct to consumer digital investment businesses achieve the same high standards as face-to-face advisers, says DWF head of financial services regulatory, Robbie Constance.
He said robo advisers that are already in operation have some urgent work to do to ensure that they are compliant with the current guidelines.
“Those still in ‘build mode’ – particularly banks – will no doubt take stock of the FCA’s statement, and add it to their long list of regulatory and other risks to worry about.
“If they haven’t already done so, firms should critically assess the FCA’s article, carry out an urgent ‘gap analysis’ against their own proposition and reconsider their product governance in light of this – and the Mifid II rules,” Constance said.
No ‘Dear CEO’ letters
While the report sends a strong message to the industry, Constance said the FCA’s need to encourage solutions to fill the “advice gap” means it gave no dire warning of enforcement action or impose a remedial timeline.
“Firms will welcome the softly soflty approach of feedback and a reminder of the need to get things right.
“In less favoured sectors of financial services, the FCA’s findings would probably have resulted in ‘Dear CEO’ letters, skilled persons’ reviews, variations of permissions, remediation – and worse.
“For now the FCA has shown willing to wait and see,” he said.
Tags: FCA | Old Mutual | Robo-advice
