The regulatory environment for providing digital advice will be the same as for personal advice, according to a consultation paper from the Australian Securities and Investments Commission (ASIC).

But the regulator concedes there are some differences, especially because such advice is delivered by an algorithm rather than a human.

This will mean training and competency standards applied to human advisers will not apply legally.

ASIC proposes having at least one person in a digital advice organisation who is responsible for training and competency standards.

“This will ensure at least one person… responsible for significant day-to-day decisions about the ongoing provision of financial product advice within a digital advice licensee holds this level of competence,” the consultation paper says.

“Our proposal may affect a small number of existing Australian financial services licensees wanting to operate a digital advice business.”

ASIC proposes a responsible manager should meet these requirements. If the organisation does not have one, somebody may have to be appointed. Under regulatory guide 105, responsible managers have to demonstrate relevant experience over the past 10 years.

Under the new regulations brokers would be exempt from proposed education standards for financial advisers. 

Although no bill has been introduced to Parliament, ASIC gives some detail on plans to amend the Corporations Act and require financial advisers to hold degrees.

The regulator will apply this legislation to the manager responsible for digital advice, but it has exempted the general insurance industry.

ASIC Commissioner John Price says the regulator wants “a healthy and vibrant digital advice sector. We see digital advice as having the potential to offer Australian consumers access to good-quality, low-cost financial advice.

“ASIC is committed to helping industry take advantage of the opportunities offered by digital advice, while ensuring investor and financial consumer trust and confidence is not compromised.”

Once regulatory guidelines for digital advice are published by ASIC, there will be a six-month transition period. The regulator wants comments on the digital advice consultation paper by May 16, with the aim of publishing the guide in August.