The Joint Committee of the European Supervisory Authorities (ESAs) has published a report setting out the conclusions of its assessment on automation in financial advice.

In the report the Joint Committee of the ESA’s sets out seven preliminary conclusions based on an earlier discussion paper that it published in December 2015. Such preliminary conclusions include:

  • several existing Directives (for example MiFID I, MiFID II, the Mortgage Credit Directive and the Payment Services Directive) and/or other regulatory requirements already apply to automated advice, even if they do not make explicit reference, and might, to an extent, mitigate some of the risks that were identified in the earlier discussion paper. Also, as the proliferation of automated advice is still at an early stage, it is less likely at the present time for some of the risks to materialise in a way that creates widespread detriment to consumers or undermines the confidence of market participants as a whole. For these reasons, the ESAs have concluded for the time being not to develop additional joint cross-sectoral requirements specific to this particular innovation; and
  • one of the main barriers to the development of automated advice are the divergent definitions of ‘advice’ across the banking, securities and insurance sectors. The ESAs will consider the possible barriers and the application of existing definitions as part of ongoing monitoring activity. In the meantime, financial institutions should carefully assess the applicability of existing law and regulation to the innovation they are developing.

View Joint Committee of ESAs report on automation in financial advice, 16 December 2016