The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.
The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.
"Firms who want to offer personalised robo-advice services must apply to us to rely on the exemption," FMA regulation director Liam Mason said. "This is consistent with our gatekeeper role for other financial advisers (AFAs and QFEs) and provides us with increased visibility over the providers entering this market."
The FMA's refreshed strategic outlook identified rapid technological change as an emerging theme it needed to be prepared for. It's also been disappointed with the level of personalised financial advice, especially for KiwiSaver members with a report in 2015 finding just one in a thousand people getting tailored advice when joining or switching a scheme.
Of the 47 published submissions, 39 broadly supported the exemption, six opposed, and two focused on the elements of the exemption rather than giving an opinion on whether it should be introduced.
The FMA said a number of the submissions wanted the exemption to be aligned with the financial adviser regime set to be introduced in 2019. However, the regulator said many of the new criteria haven't been developed yet and that it can't bring forward those requirements.
Last year the government announced proposals to reform legislation governing financial advisers in an effort to streamline the different types of advisers and advice, which had been confusing for clients. The new framework would replace the existing two tiers: advisers, who are individually accountable for meeting their obligations; and agents, whose employer is accountable for their actions.
Commerce Minister Jacqui Dean introduced a bill to parliament in August, and the legislation will need to go through select committee hearings and two more readings before it's passed into law.