Robo money advice under the microscope Monday 12 Oct 2015

Robo money advice under the microscope

Computer algorithms that offer financial advice will be studied as part of a review into the money advice sector.

So-called robo-advice uses computers to help individuals find products that suit their finances and attitude to risk.

They are used relatively widely in the US.

A consultation, starting on Monday, will see the Treasury and City watchdog take views about the cost of advice.

"There is lots of innovation going on already," said Tracey McDermott, acting chief executive of the Financial Conduct Authority (FCA).

"We need to assess whether or not [robo-advice] can provide the services that people need, and to ensure that the regulatory and legal framework allows this to happen."

The suggestion is that automated robo-advice could allow people to make decisions without having to pay more for a dedicated financial adviser.

Complexity

The consultation is part of an inquiry that will consider consumers' access to financial advice, and particularly the gap for those who do not have significant wealth.

It comes after the change in pension rules, which came into effect in April.

The changes, allowing access to pension savings, has prompted questions about the suitability of advice.

The review will consider all types of retail financial products including pensions, savings, mortgages, and insurance. It will publish its findings before next year's Budget.

Ms McDermott told the BBC that as people were living for longer, long-term financial decisions were becoming more complex. She said that many people needed to be encouraged to engage with money services for their long-term financial health.

Harriett Baldwin, economic secretary to the Treasury, said: "We are exploring what more can be done to make sure consumers can access high quality and affordable advice so they can make informed decisions with their hard-earned money."