A piece of advice: the robots are coming...

Robotic, artificial intelligence, robo advisor, chatbot concept

Financial Services Update

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Having carried out a consultation as to whether or not it should use its exemption powers, the FMA has announced that it will grant an exemption to enable personalised robo-advice. The FMA’s full media release and 400 page summary of the consultation submissions can be found on this link.

While a draft exemption has yet to be published, the FMA has indicated that it will be undertaking a further consultation on the detail of both, the exemption and the application process in November. The aim is for the exemption to be finalised and in place for applications from early 2018.

The FMA has stated that it will not be imposing financial limits on personalised robo-advice and that the eligible products list, which was initially limited to highly liquid or easily transferable financial products, will be expanded to include personal insurance products (life, health, income protection) and mortgages.

Firms that wish to take advantage of the exemption will need to apply for an exemption to the FMA and show that they have the capability and competence to provide the automated service. In addition, they will need to demonstrate that their directors and senior managers are of good character. The exemption conditions will also be designed so that a robo-advice service is provided in the same manner as the existing requirements for Authorised Financial Advisers – this is consistent with the general approach that financial services regulation should be technology neutral. 

While the exemption application process will not be a substitute for obtaining a licence under the new advice regime that is expected to be put in place in 2019, those firms that make use of the exemption and prove their credentials should be well placed when that licensing regime does arrive.

If you would like to progress your robo-advice proposals and discuss how you can start getting ready for the exemption, please contact one of our experts.