FCA speaks on robo advice

Bob Ferguson has spoken on FCA’s take on robo advice. FCA supports automated advice, as it sees its use to consumers who are “unserved” or “underserved” by traditional models. FCA is keen to help firms who are developing automated models, with a view to reducing compliance risk, and testing suitability of recommendations to customers.

He commented that robo-advice is just another way of providing advice and noted that key regulatory obligations are neutral as to the channel of delivery. He supports it because it addresses the FAMR recommendation to make mass-market guidance and advice as cost-effective as possible. He discussed the help that FCA’s Advice Unit gives to firms wanting to develop models and said it is currently helping 20 firms, and expects that number to rise.

He discussed some themes that had emerged as FCA discussed automation with firms, including that consumers tend to search for particular products rather than for advice as such, and that how robo advice could be controlled across borders.

He finished by stressing that FCA is focussed on outcomes when it supervises firms and their activities. It will start assessing distributors soon, and warns applicants for authorisation to expect challenges on the client journey and other aspects of robo models.