The Australian Securities and Investments Commission (ASIC) says it supports the move towards “robo-advice”.

Chairman Greg Medcraft told a conference in Sydney last week that in the past three years automated advice has grown in the US and UK.

“Australian licensees and some start-ups have observed the growing popularity of robo-advice models offshore,” he said. “They are now actively looking to develop, or are developing, their own robo-advice models.”

Mr Medcraft says the regulator has no problem with such moves.

“ASIC is very supportive of the automated provision of advice. We see it has the potential to offer a convenient, low-cost advice service to consumers.

“We also see benefits such as improved compliance and record keeping, and the potential to reduce conflicts of interest.”

Mr Medcraft says the regulator still has much to learn about business models and issues in automated advice.

“The same laws and obligations for giving advice apply to digital advice – we see the legislation as technology-neutral in the obligations it imposes. However, robo-advice does raise some interesting regulatory issues and challenges.”

These include how robo-advice meets the best-interests duty of the Future of Financial Advice legislation and how providers develop and test algorithms.

There are also questions over how robo-advice providers handle training and competency requirements.

Compensation when things go wrong is another issue the regulator must consider, Mr Medcraft says.

“We have set up an internal robo-advice taskforce to look at robo-advice issues. We are discussing these issues with robo-advice providers and those looking to join the space.”