The Association of Financial Advisers (AFA) wants robo-advice providers to comply with the same rules as traditional advice providers.

In a submission to the Australian Securities and Investments Commission (ASIC) paper on robo-advice, the AFA says the way the advice is delivered shouldn’t make any difference to compliance rules.

“The AFA considers the obligations upon digital advice providers must be consistent with the obligations upon human advice providers regardless of the method,” its submission said.

“The financial advice profession has been through significant regulatory change to raise trust and confidence of consumers.”

ASIC proposes in the paper a responsible manager for robo-advice should meet proposed higher training and competence standards while also complying with a code of ethics and be covered by an approved compliance scheme.

“Any inconsistent application of standards to be applied to robo-advice could lead to unintended consequences, creating incentives to avoid regulatory costs, compliance and lowering consumer protections,” the AFA submission says.

“We consider that all responsible managers must meet the same standards proposed for personal financial advice providers.”

The AFA is also concerned about ASIC’s proposed transition period for robo-advice providers to meet the competency standards for an Australian financial services licence.

ASIC is suggesting a six-month transition period from when regulations for robo-advice are issued.

“We are concerned the advice provided during the proposed six month transition period may not be competently provided if an appropriately qualified responsible manager is not overseeing all advice,” the AFA submission says.

“Consumers of such digital advice may be exposed to potential financial losses if they rely on advice that has not been based on strong foundations and oversight.”

The AFA is not opposed to robo-advice and admits it could enable more consumers to receive financial advice. Currently only two in every 10 Australians are believed to receive financial advice.

“If technology-based offerings can fill the gap, this could be a helpful stepping-stone to drive the uptake of full, personally delivered financial advice,” the submission says.

“But as more Australians start to seek advice, human advisers are best placed to deliver upon clients’ more complex advice needs with empathy and holistic oversight of financial and lifestyle goals for clients.”