Sydney-based Australian financial services (AFS) licensee, Lime FS Pty Ltd (Lime FS), has voluntarily shut down two digital advice tools following concerns raised by ASIC.

Digital advice, also known as robo-advice, is the provision of automated financial product advice using algorithms and technology, without the direct involvement of a human adviser.

Lime FS’ corporate authorised representatives, Plenty Wealth Pty Ltd (Plenty Wealth) and Lime Wealth Pty Ltd (Lime Wealth), are digital advice providers authorised to provide personal financial advice to consumers.

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.

ASIC 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.

Lime FS decided to close down both online tools for the foreseeable future as a result of ASIC’s concerns.

ASIC Commissioner, Danielle Press said, “Digital advice tools offer a convenient and low-cost alternative to consumers who may otherwise not seek personal financial advice. 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.

ASIC expects AFS licensees and financial advisers using or recommending digital advice tools to ensure that they adequately monitor and test the advice for quality and appropriateness,” Ms Press said.

ASIC released guidance to industry on providing digital advice to retail investors in 2016. Regulatory Guide 255: Providing digital financial product advice to retail clients (RG 255) includes guidance on some issues that are unique to digital advice, such as how the organisational competence obligation applies to digital advice licensees and the ways in which digital advice licensees should monitor and test their algorithms.

If you are concerned about advice you received from Plenty Wealth or Plenty Plus, you can consider:

• lodging a complaint with Lime FS via its internal dispute resolution process;
• notifying a dispute with the Australian Financial Complaints Authority (AFCA) https://www.afca.org.au; and/or
• contacting your current financial adviser or obtaining independent legal advice.  

Consumers wanting information on digital advice and how it is provided can find out more on ASIC’s MoneySmart website.