ASIC concerns lead to closure of digital advice tools offered by Lime FS
In some instances, the recommendations generated by the tools were in conflict with client goals.
Australian financial services (AFS) licensee Lime FS Pty Ltd has decided to shut down two digital advice tools following concerns raised by the Australian Securities & Investments Commission (ASIC).
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.
Following review of a sample of advice files from Plenty Wealth and Lime Wealth, ASIC raised concerns with Lime FS about the quality of advice provided by the online tools and Lime FS’ ability to monitor the advice.
In particular, 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.
The Australian regulator published guidance to industry on providing digital advice to retail investors in 2016. The guidance covers 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.
Members of the public who have concerns about advice received from Plenty Wealth or Plenty Plus can consider:
- lodging a complaint with Lime FS via its internal dispute resolution process;
- notifying a dispute with the Australian Financial Complaints Authority (AFCA), and/or
- contacting their current financial adviser or obtaining independent legal advice.
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”.