Former Financial Conduct Authority technical specialist Rory Percival has said good robo-advisers shouldn’t fear the regulator.
Speaking at the Dynamic Planner conference today (1 March) at The Brewery in London, Mr Percival said the regulatory risk of automated advice has been overplayed.
His comments come after back in September 2015 then economic secretary to HM Treasury, Harriet Baldwin, said a start-up that wanted to enter the automated advice space was told it would have to ask consumers 247 questions to currently comply with regulation.
Ms Baldwin said both the government and regulator have promised to develop a ‘sandbox’ for innovation in this space.
Speaking at the FCA’s ‘robo-advice’ conference, Ms Baldwin said the ‘sandbox’ could be a “safer space” for firms to experiment with ideas for consumers without the full burden of regulation.
But speaking at today’s Dynamic Planner conference, Mr Percival said the robo-advice sector generally was too worried about the regulator.
Mr Percival, who left the regulator after 10 years last year to set up his own compliance consultancy, said: “The rules are not an end in themselves. They are there to encourage firms to create the right outcomes.
“As long as you are creating the right outcomes for clients, the regulator is going to be happy.”
Talking about the impact of technology on the way advisers do business, Mr Percival said in the short to medium term advisers would not be affected by robo-advice.
But he questioned whether this would remain the case in the long term and said advisers should think about people who are accessing automated advice now or using the non-advised investment propositions and how to convert those to opting for face-to-face advice.
He said: “Where are those clients of the future coming from?
Mr Percival said advisers would have to address this issue if they wanted “long-term sustainable and valuable” businesses.