ASIC digital regulatory guidelines backlash misguided


While fears spread that ASIC’s regulatory guidelines for digital advice will increase compliance costs, governance measures are still the core of digital advice, says Decimal.

Technology company Decimal will release a white paper detailing the benefits for superannuation providers in the Australian Securities and Investments Commission (ASIC) digital regulatory guidelines.

While met with initial scepticism from the industry, Decimal executive director Jan Kolbusz said that ASIC recognises that compliance is fundamental to digital platforms being used by enterprise organisations, and distinguishes well between them and customer-focused robo advice.

“Digital advice is about reaching out to every type of consumer to help them with any aspect of their financial life. Robo advisers target only those lucky consumers with spare cash to invest,” he said.

“While addressing consumer facing robo-advisers, [ASIC] Regulatory Guide (RG) 255 also provides financial institutions with a clear set of guidelines to make appropriate decisions about offering comprehensive digital advice solutions.”

Kolbusz said that digital advice was a necessary step forward for the industry and would allow everyday Australians to access financial advice.

Kolbusz exemplified that compliance costs for offering traditional forms of financial advice were a major inhibitor to everyone except those with additional wealth for investment.

“Compliance has accounted for around 30 per cent of the cost of advice,” he said.

“Digital advice needs to be infinitely scalable…part of the reason digital platforms are so compelling is the massive cost reduction capability.”

While the pros outweighed the cons, Kolbusz acknowledged that technology providers could face an uphill battle attempting to meet the RG 255 guidelines set in place.

“For starters, robo advisers targeted directly to consumers need an Australian Financial Services Licence, whereas an enterprise digital advice platform is designed for use by financial institutions that already have an AFSL,” he said.