Robo: Get behind, or get left behind

The FMA is consulting on whether it should offer a class exemption for roboadvice, to allow providers to begin offering it before 2019, when reforms would otherwise have made it possible.

“I think the proposal is well considered and will keep both incumbents and new entrants to the market happy,” said Geoff Ward-Marshall, a senior associate at DLA Piper who has been a vocal commentator on roboadvice issues.

“The proposed conditions are very similar to those that we have seen imposed by regulators in other jurisdictions, such as Australia, and that our offices in those jurisdictions have been advising on for some time. We don’t expect there to be too much objection to the conditions and they should have been anticipated by those that have been actively preparing to provide automated advice.”

The proposals include a number of restrictions: It is expected that the exemption will only apply to products that are considered easy to exit, such as KiwiSaver, managed funds, general insurance, and government bonds.
There will also be safeguards required to filter out clients who were not suitable to receive roboadvice.

Ward-Marshall said it would be those restrictions that attracted the most comment but they did not seem unusual.