Lime FS Pty Ltd has chosen to close its robo-advice businesses, Plenty Wealth and Plenty Plus, after discussions with the Australian Securities and Investments Commission (ASIC) about compliance issues.
Plenty Plus and Plenty Wealth were online services providing clients with financial advice covering life insurance reviews, budgeting analysis, tax, investing and superannuation strategies, such as the establishment of SMSFs, the commencement and commutation of pensions, and contributions recommendations.
ASIC raised concerns with Lime FS about the quality of advice being provided from these services as well as its ability to monitor the advice provided after reviewing a sample of client files.
In particular, the regulator was worried that the level of client inquiries regarding financial situations, objectives and needs were inadequate. Further, it observed some of the robo-advice provided was in conflict with clients’ goals as well as other online-generated recommendations.
Lime FS had been corresponding with ASIC to determine the rectification action needed to allay the concerns over the advice provided by Plenty Plus and Plenty Wealth, but could not come to a satisfactory resolution.
“Unfortunately, the further steps we would need to take, over and above the extensive steps we have already taken both proactively and responsively, would not be commercially viable for us at this point in time,” Lime FS said in a statement.
“Given the above, the Plenty Wealth and Plenty Plus businesses will cease providing advice.”
In light of the decision to close its robo-advice facilities, Lime FS called for a review of the digital advice regulatory framework.
Commenting on the development, 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 (Australian financial services) licensees and financial advisers using or recommending digital advice tools to ensure that they adequately monitor and test the advice for quality and appropriateness.”
