Around 18 years ago when I was at the Personal Investment Authority a major computer manufacturer asked for discussions with me over its plans to introduce an “expert” system to deliver financial advice.
Although the company’s aspirations were wildly over-optimistic given the state of technology at the time, I told those involved that there was nothing in the regulator’s rules at the time that prohibited online advice to customers. A message I repeated many times over the years to others with similar ideas.
Technology certainly does not stand still and expert systems are already in use in such critical areas as medicine.
It is not a question of whether a serious online advice service will happen but when it will.
Sure, it is not going to be easy. The complexity of financial services and its rapidly changing nature will be difficult to factor in but I’m sure it will happen.
Some point to the importance for customers of the human contact with an adviser who can take a “common sense” view. But I think there are counter arguments.
I met many hundreds of advisers over the years. A few despite being real charmers there were also real rogues. Others were models of probity and competence but had all the personality of a dog whelk and I found it difficult to spend a minute in their company let alone the time which would be needed to deliver full financial advice. An online advice offering removes the issue of personal chemistry between adviser and client.
I hope the FCA’s stance at the Treasury select committee signals a change of approach on the part of the regulator. At the least some guidance from the regulator might help to give confidence to both the industry and consumers over the development of online offerings.
The FCA might also look again at accreditation of software. Since leaving the regulator I have frequently argued for a system of voluntary accreditation for software in the same way as examinations and professional bodies are accredited by the regulator.
David Severn is a former head of retail policy at the FSA