New Zealand’s national securities regulator, the Financial Markets Authority (FMA), is proposing to introduce an exemption for robo-advisors in an effort to facilitate industry innovation and expand investor access to financial advice
Specifically, the FMA issued a consultation paper on the matter on Wednesday, proposing an exemption that would allow firms to provide personalized financial advice generated by algorithms. The FMA says that current securities laws, which were passed in 2008, did not contemplate the advent of digital advice. Notably, the laws require that only a “natural person” can give advice.
The proposed exemption would limit robo-advisors to providing financial advice and investment planning services; it would not apply to discretionary investment management services and it would limit robo-advisors to a list of eligible products considered easy to exit.
The proposals also establish disclosure and capacity requirements; they also impose safeguards, including processes to filter out clients that are not suited to receive robo-advice.
“We are seeking to ensure we maintain the standards of consumer protection provided by the legislation while encouraging innovation that can help more people get help with investment decisions,” says Liam Mason, the FMA’s director of regulation. “Robo-advice offers a way to address the low numbers of consumers currently receiving personalized financial advice.”
The proposed exemption represents an interim measure designed to address the provision of robo-advice before more concrete legislative changes can be adopted.
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