Expansion of digital advice raises ‘big questions’, says Stuart Robert

“Technology now allows you to approve a loan in 10 minutes and do a settlement completely electronically,” said Mr Robert.

While technology is heading in the same direction with financial services and advice, Mr Robert said there are still some questions around what that will look like.

“How do we deal with technology based advice or robo advice? What is the future of algorithms and AI when it comes to advice. It’s a hugely vexed question,” he stated.

“We will get there but not just yet because advice needs to go two ways like [two people] chatting. [So,] until such time as you can question big tech as an average person, it’s going to be difficult to get that AI siren advice.”

Mr Robert said while he wants to see a role for technology in the financial advice space, that role needs to be defined and there “needs to be a technical journey on what that looks like”.

“There are some really big questions to answer. [For example], if something goes wrong, then does AFCA take the builder of the algorithm to task? Where do you go?” he questioned.

The Quality of Advice Review Proposals Paper noted that the current regulation around advice is poorly suited to digital advice providers because it assumes there is an individual providing the advice.

“It is difficult to know how an algorithm or software program can act in the best interests of the client,” the paper stated.

One of the proposals in the paper would permit a digital advice provider to provide advice to a customer for a fee without the provider (or any of its employees) being a ‘relevant provider’.

The paper noted that the possibility that a digital advice provider may provide advice that only serves the interests of the provider cannot be dismissed.

However, it stated that whether or not the digital advice is good advice will be evident from the advice provided and the design of the program, the paper said.