Figures behind burgeoning robo-advice services have defended the sector as "still evolving" after the Financial Conduct Authority found several causes for concern in the advice given to clients.
In a report published yesterday, (21 May), the FCA revealed some robo-advice firms were failing to properly disclose prices and services, and crucially, the regulator flagged risks clients were not receiving suitable advice.
As a result, the FCA has required many of the robo-advisers which took part to make "significant changes" to their businesses.
But automated advice companies FTAdviser spoke to defended their model, saying such problems are not unique to robo-advice, and that as the youngest part of the financial services sector they are still evolving.
Anthony Morrow, chief executive of Evestor, said: "I think suitability and appropriateness has always been a big problem for both the online advisers and also DIY investors.
"We sit behind regulated advice and therefore we will tell someone if they should be investing or not and into which product. This means that a large percentage of our users we tell not to invest.
"We can also track where those people go from our site having been told not to invest by us. We also provide access to human advisers through appointment.
“We've just completed our first year of kicking the minimum viable product around and now are investing heavily in the system itself, including website, customer journey, customer portal and the app.
"All of these will be ready at the end of the summer and give us the base on which to maintain this momentum we have going with increased marketing, now we have the core proposition refined.
"This is a fast moving space and it is certainly unlikely that the winning model is out there at the moment."
Meanwhile Al Rush, principal at Rutland-based Echelon Wealthcare and founder of robo-advice firm Fiver a Day, said his business had taken part in the FCA's review, with seven cases deemed suitable and three unclear.
He said: "I am satisfied but there is work to do. I think I need to do some housekeeping and look at thing in a different way but that's part of the evolution of these services. Perfect is not the enemy of good here.
"I think it was good to have a review of how robo-advice is evolving, because I don't think it has evolved in the way people thought it would."
The FCA found weaknesses in identifying and supporting vulnerable consumers, with some firms relying on the client to self-identify as vulnerable, and this was something Mr Rush said he would do more work on.
He said: "That's something I will take on board completely. If you look at the steelworkers in Port Talbot, every single one of was probably vulnerable and how can a robo-adviser pick that up? Does Fiver a Day pick that up to the standard I do when I meet someone face-to-face? Probably not.