The Joint Committee of the European Supervisory Authorities (ESAs) has published a discussion paper on automation in financial advice, aimed at assessing what, if any, action is required to harness the potential benefits of this innovation and mitigate its risks.

The discussion paper describes the main characteristics of automated financial advice tools as observed by the ESAs and presents a preliminary assessment of the potential benefits and risks.

On the one hand the potential benefits include: (i) potentially wider access for consumers to financial advice; (ii) the provision of advice at lower cost; and (iii) the potential to deliver a highly consistent consumer experience when seeking financial advice. On the other hand, the potential risks include the possibility that consumers could misunderstand advice provided to them without the benefit of a human advisor to support the advice process, and the potential for limitations or errors in automated tools that may not be easily identifiable for consumers or financial institutions.

The ESAs are of the view that, even though automation in financial advice is not presently observed equally across all financial sectors and / or Member States, the phenomenon has the potential to continue to grow. Stakeholders are invited to confirm or challenge the views expressed by the ESAs, and specific questions are asked at the end of each chapter

The deadline for comments on the discussion paper is 4 March 2016. The ESAs will assess the feedback in order to better understand the phenomenon and to decide which, if any, regulatory and / or supervisory action is required.

View Joint Committee Discussion Paper on automation in financial advice, 4 December 2015