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Robo exemption would clarify murkiness: FSF

Consumers could be put at risk if the Financial Markets Authority does not allow roboadvice to be deployed soon, the Financial Services Federation is warning.

Friday, July 21st 2017, 5:59AM

by Susan Edmunds

The FMA is consulting on its plans to provide a class exemption to allow roboadvice ahead of the introduction of new financial advice laws, in 2019.

In its submission, the FSF said it was already possible for consumers to access financial products and advice online, particularly with insurance products and credit contracts.

“These are more often than not being provided by companies who would wish to be compliant and apply appropriate consumer protections but, because no guidance exists as to how they might achieve this, might inadvertently not meet their obligations. It would seem better for an exemption to be put in place with appropriate limits and conditions rather than having nothing as is currently the case.”

It said, without the exemption, providers might continue to offer services that way, without the protections that would be built into the FMA's proposed limits and conditions.

“This is not to say that providers who currently have an online offering for their products and services are presently trying to avoid any related compliance obligations towards consumers, but rather that these have never been articulated as clearly as is now proposed, and the FSF sees the proposed exemption as one very good way to remedy that by making those matters more clear.”

The FSF said personal insurance products should be added to the eligible product list.

"It is essential that the law keeps up with this demand to ensure adequate consumer protection, without stifling innovation,” Financial Services Federation executive director Lyn McMorran said.

“Currently, the cost of accessing financial advice through an authorised financial adviser or other human adviser makes such access unaffordable for many New Zealanders. This means that people who do access advice on a person-to-person basis tend to be those with lump sum amounts of money to invest, rather than those people starting out to build their nest eggs.”

READ MORE: FMA overstepping bounds

Tags: financial advisers FMA FSF roboadvice

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