The Financial Planning Association (FPA) is calling for the existing financial advice regulations to apply to providers of robo-advice.

In a submission to the Australian Securities and Investments Commission’s consultation paper on robo-advice, the FPA says any guidance papers on this new advice channel should refer operators to the existing rules affecting financial advisers.

The association has also warned ASIC that new or amended regulations on advice should not be introduced just for these new providers.

“The principle we believe which must be applied is that any provider of advice must be held to the same standards, irrespective of the channel the advice is provided by,” the submission says.

“Ensuring organisational competence, compliance with legislated obligations and appropriate systems of monitoring the provision of advice are universal measures to ensure consumer protection.”

The FPA supports ASIC’s proposal that digital advice providers should meet the existing minimum training and competence standards.

“Given that both digital and traditional channels deal with retail investors, we presume that applying different standards to different channels can’t be justified.”

But it opposes the proposal for a transition period for robo-advice providers to meet the existing training and competence standards.

“We feel there is no basis for a transition period and this sets a dangerous precedent that businesses can enter an industry without meeting prescribed standards and won’t be called to account,” the submission said.

“This puts retail consumers at significant risk.”

The FPA also wants ASIC to provide guidance on professional indemnity insurance for robo-advice operators.

“Face-to-face advice by its very nature generally limits the amount of clients that can be inter-acted with,” the submission says. “Digital advice, however, has the ability to scale exponentially, and potential damages requiring indemnity insurance could be considerably higher.”

The FPA questions whether ASIC has spoken to the professional indemnity market about them designing products for this new type of advice.

With possible legislation in a future Parliament protecting the use of the term adviser or financial planners, the FPA has raised concerns about the use of the word “advice” in any ASIC guide.

It is calling on ASIC to change some of the language in the proposed regulatory guide especially where it relates to use of the term adviser.