The FCA has been told it should aid firms that are developing robo-advice services to make them ready for consumers more quickly.

Large-scale automated advice models should be brought to market more rapidly with FCA help, the authors of the Financial Advice Market Review said today.

The Government has been told by the FAMR panel today that technology must play an important role in addressing the problems of consumers accessing financial advice.

The FAMR report said technology can help create “a more engaging, cost-effective advice market”.

It recommended that the FCA extends the work of Project Innovate and establish a unit to help firms develop their automated advice models.

Authors of the report proposed the FCA should “set up a dedicated team to help firms developing large-scale automated advice models to bring these to market more quickly.”

The FAMR report stated: “While many consumers will continue to seek face-to-face advice, technology-based models are poised for growth.

“FAMR wants to support the development of mass market automated advice models that have the potential to bridge the advice gap, whether they are fully automated, hybrid (i.e. with human interaction in the process) or tools to bring efficiencies to the face-to-face.

“The costs of supplying face-to-face advice are significant, meaning most firms are unable to provide advice at a price many consumers would consider reasonable.

“As a result, many consumers who want to receive this kind of support are left without it unless they are able and willing to pay for advice. FAMR believes that new technologies can play a major role in driving down the costs of supplying advice and enabling firms to engage with consumers more effectively.

“FAMR recommends taking steps to ensure new technologies can be exploited to drive down the costs of supplying advice, making it affordable for more consumers.”

The panel noted a number of market developments had already taken place and recommended “building on this momentum by developing a clear framework to give firms the confidence to deliver streamlined advice on simple consumer needs in a proportionate way”.

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The FCA has already provided individual support to firms using technology to deliver mass market advice and developed an Innovation Hub.

The panel said: “FAMR believes that the FCA should build on these successful initiatives to support more firms as they bring new technology-based models to market.

“FAMR recommends that the FCA establishes a team to do this, drawing on expertise from different areas of the FCA as required. This ‘Advice Unit’ could form part of Project Innovate.”

Malcolm McLean, senior consultant at Barnett Waddingham, said: "Where the review does score in my view is the clear support and backing it gives to the use of new technology to help make financial advice more affordable for millions of consumers.

"The FCA is to set up a new advice unit to help financial firms to develop automated programmes to deliver 'robo-advice'. Although this is unlikely to actually be advice as such it will allow consumers to go on-line, answer some questions, and receive financial help without having to pay for individually tailored solutions – all of which should be positive and will help consumers to better understand the issues and what their next steps should be."

ABI Director of Regulation Hugh Savill said: “Consumers should benefit from innovation in robo-advice."