The FCA has published a speech by Bob Ferguson (Head of Department, Strategy & Competition Division, FCA). The speech is entitled Robo Advice: an FCA perspective.

Key points in the speech include:

  • the FCA sees automated advice as a valuable vehicle to help tackle the issues faced by those consumers who are unserved or underserved by more traditional advice models, as well as promoting competition in the UK financial advice market;
  • the FCA’s Advice Unit continues to be active in providing regulatory feedback and external tools to firms developing an automated advice (or guidance) model;
  • automated advice brings its own risks, but well-designed models have great potential for compliance risk reduction; and
  • the FCA will supervise with a focus on outcomes the suitability of recommendations for the consumer, acting where it sees harm.

Mr Ferguson also discusses emerging themes in robo advice. In the autumn of 2015 the FCA held a three day robo advice forum that included presentations from various innovators showcasing the automated models they use. Mr Ferguson notes that three themes emerged from the forum:

  • an expectation that a typical model might emerge that is a hybrid of human plus automation rather than purely robo advice. Two years on, it is still not clear whether this will be the case. However, one of the areas of feedback that the FCA Advice Unit has been asked about has been combining human intervention with automated advice processes;
  • customers search for product words such as ISA or pensions, but not financial advice. If that is right, then it demonstrates the importance of firms being clear about the nature of the service they are offering (advised versus non-advised, wide scope versus narrow scope); and
  • like most other aspects of financial services, robo advice reaches beyond national borders. This will become more evident over time.

View Robo Advice: an FCA perspective, 2 November 2017