The growth in assets flowing into the biggest US robo advisers, Wealthfront and Betterment, has slowed sharply in recent months. Nevertheless, Mr Medcraft said Australian licensees and start-ups had watched the growing popularity of robo advice offshore and were looking to develop it in Australia. The leading robo adviser in the Australian market is Stockspot, founded in 2013 by former UBS portfolio manager Chris Brycki. National Australia Bank said last month it was developing robo-advice technology. NAB and Commonwealth Bank of Australia have both been embroiled in advice scandals driven by poorly structured incentives for human advisers. "The need for advice that is accessible and trusted is absolutely critical. So we are very supportive of automated provision of advice," Mr Medcraft said. "We actually see it has potential to offer a convenient, low-cost advice service to appropriate customers. We also see benefits in terms of improved compliance, and record keeping. And thirdly, and most importantly, is the potential to reduce conflicts of interest. "At the end of the day, the same laws and obligations for giving advice apply to digital advice. We see the legislation is technology neutral in the obligations it imposes." In a speech that covered other issues around the regulation of digital businesses, Mr Medcraft called for law changes where feedback about businesses from social media could be used by regulators to take action against questionable operators. "You have to think about how you integrate that into regulations and laws because that social media feedback that sits on digital technology is itself a strength, and control that can't be ignored," he said. ASIC is monitoring the overseas development of regulation on fintech and Mr Medcraft suggested the government should look to China, which was implementing a flexible model that introduced a proportional approach where some start-ups are "too small to care" but then become "too big to ignore". END PRINT With big banks and the Australian Securities Exchange highlighting growing interest in the blockchain technology underpinning bitcoin, Mr Medcraft said the potential for blockchain technology was "to completely disrupt clearing and settlement and the way exchanges operate today". Loading ASIC has established a Digital Financial Advisory Committee, part of its "innovation hub", which is attempting to engage more closely with the start-community and pursue a collaborative approach to regulation.
At an industry event today, Greg Medcraft, chairman of ASIC, stated that computer-generated financial advice could slash investment costs and eliminate conflicts of interests. Major domestic banks have been embroiled in advice scandals over the past couple of years. The regulator has established a taskforce to investigate the suitability of potential entrants and aims to pursue a collaborative approach to regulation with the innovators in the sector; which is at an earlier stage than in the US and Europe. Stockspot is considered the leading player in the field, with new firms such as Ignition Wealth and Clover launching this year. In September, as reported in our briefings, NAB launched a digital advice platform, but it fell short of recommending specific products.