Regulation  

FCA sets high standards for robo-advisers

FCA sets high standards for robo-advisers

The Financial Conduct Authority’s (FCA) director of strategy and competition has warned providers of robo-advice that they will have to meet the same standards as their face-to-face equivalents.

At the recent Global Digital Banking Conference, Christopher Woolard said more consumers than ever require access to financial services that serve their changing needs.

He added: “The theme of access is one that we’ve seen crop up again and again in our recent work, including in our joint review with the Treasury of the financial advice market, published in March.

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“Technology takes centre stage among these recommendations. Automated advice offers the chance of ensuring consistent outcomes for consumers, while also stimulating a more engaging and cost-effective advice market.

“To be clear, automated advice models must meet the same standards as face-to-face advice, and the responsibility for ensuring their model meets the regulatory requirements rests with each firm’s senior management.”

Mr Woolard said once the FCA has taken a few firms through the new automated advice unit, it will share the lessons learned in the form of tools and resources, which will be publicly available to the whole industry.

He added: “We remain alive to the risks of technological innovation and the challenges it presents to markets and regulators alike, such as resilience, cyber-crime and financial exclusion, so it is important we get our approach to regulating firms in this space right.

“We seek to ensure that our regulation is proportionate, up-to-date and strikes the right balance between permitting innovation that delivers competition, and long-term consumer benefits while maintaining adequate consumer protection.”

Mr Woolard said that since the launch of Project Innovate, the regulator has received more than 500 requests for support, and offered direct support to more than 250 firms who presented innovative ideas likely to have customer benefit.

David Stevens, head of automated advice strategy at LV, said: “The automation of advice shouldn’t be expected to compromise on regulatory standards and the important protection this offers to customers from professional advice.

“The technology and complex algorithms supported by robust risk and governance frameworks, makes this entirely achievable today.

“LV, through our Retirement Wizard proposition, has offered fully regulated automated advice across different types of products and providers, providing a recommendation for a retirement income, including a blend of products where appropriate.”