The Australian Securities & Investments Commission (ASIC) has released guidance on regulating digital advice to providers to test and monitor their algorithms in its latest guidance.
Digital advice is the provision of automated financial product advice using algorithms and technology and without the direct involvement of a human adviser.
ASIC said that the digital advice can comprise general or personal advice, and range from advice that is narrow in scope to comprehensive financial product advice.
ASIC said that the digital advice licensee will be responsible for monitoring the performance of the algorithm, including test plans, test cases, test results, defect resolution and final test results.
ASIC deputy chairman Peter Kell said: “ASIC is committed to encouraging innovation that may benefit consumers. Our guidance on regulating digital advice is a useful starting point for those providing or intending to provide digital advice in Australia.
“ASIC supports the development of a healthy and robust digital advice market in Australia as a convenient, low-cost option for retail clients, and our guidance will help ensure that consumers can have confidence when they deal with digital advice providers.”
The financial regulator, in March 2016, released Consultation Paper 254 Regulating digital financial product advice, attaching a draft Regulatory Guide on regulating digital advice.