An Australian digital advice firm has voluntarily shut down two robo-advice tools after ASIC raised concerns about conflicts and poor quality advice provided to consumers.
Sydney-based financial services licensee Lime FS has announced it is shutting down its two subisdiaries Plenty Wealth and Lime Wealth, which provided automated advice to consumers on self-managed superannuation fund establishment, life insurance, budgeting and tax issues, using a proprietary algorithm.
Both tools operate using algorithms and technology, without direct involvement of a human adviser.
The advice must be appropriate to the client and comply with the best interests duty"
Plenty Wealth provided advice via an online tool about budgeting analysis, life insurance reviews, tax, investment and superannuation recommendations. Lime Wealth provided advice via an online tool about the establishment of self-managed super funds (SMSFs), purchasing property with superannuation, commencing and ceasing pensions, and contributions into superannuation.
After reviewing a sample of advice files from Plenty Wealth and Lime Wealth, ASIC raised concerns with Lime FS about the quality of advice being generated by the online tools and Lime FS' ability to monitor the advice.
The corporate regulator was concerned that the level of inquires made by the online tools about client objectives, financial situation and needs were inadequate. In some instances, the recommendations generated by the tools were in conflict with client goals or with other recommendations also generated by the tools.
ASIC was also concerned that there may have been a conflict between client goals and the recommendations offered by the algorithm.
"Digital advice tools offer a convenient and low-cost alternative to consumers who may otherwise not seek personal financial advice," Australian Securities and Investments Commissioner Danielle Press said.
"However, the advice provided through these tools must meet the same legal obligations required of human advisers - the advice must be appropriate to the client and comply with the best interests duty."
The business was a member of the Fintech Australia industry body and a former participant in ASIC's Innovation Hub program.Subscribe to International Investment's free, twice-daily, newsletter