FMA seeks further consultation into robo advice

The Financial Markets Authority (FMA) has announced that it is seeking comments from the industry on how its decision to grant an exemption to enable the provision of personalised digital (robo) advice is reflected in the draft exemption notice and application documents.

The FMA said the policy decision to proceed with the exemption is not open for review, but it was seeking feedback on the following:

• The draft exemption notice
• The draft information sheet – that explains the exemption notice, including providing guidance on the exemption conditions
• The draft application documents – an application form, ‘good character’ declaration form, and application guide. The application guide sets out the minimum standards applicants will need to show the FMA they meet, all the questions in the application form, the FMA’s comments about these.

In October, the FMA used its exemption powers to leapfrog planned reform to the Financial Advisers Act (FAA) which will allow advisers and companies to provide financial advice through a digital platform.

The current reading of the FAA states that only a natural person can give personal advice, ruling out digital advice that would rely on an algorithm. The FMA’s exemption will overrule this clause until the FAA is updated in 2019. This brings New Zealand in line with the US, the UK, Canada and Australia.

Advisers and companies will need to apply to the FMA and be granted permission before they can rely on the exemption.

This is the latest consultation into the FMA’s digital advice exemption and is expected to be the last. The FMA said in October it was hoping to open applications for digital advice in February, 2018.

Submissions close on Friday, December 15, at 5pm.