Scott Morrison backs robo-advisers to cheap superannuation advice to retirees
Treasurer Scott Morrison has endorsed “robo-advisers” offering cheap automated superannuation advice as the next step in Australia’s financial industry, and urged consumers to overcome their privacy fears about business and governments sharing personal data.
As the Turnbull government continues to battle controversy over Centrelink’s “robo-debt” letters, Mr Morrison has been spruiking to his international counterparts the commercial and economic opportunities of automated services and sharing consumers’ data.
“One of the prime examples is robo-advice, which has the potential to offer financial advice to a wider cross‑section of the community,” Mr Morrison told at a G20 conference in Germany. “In Australia, businesses are beginning to integrate robo-advice into the retirement savings system to help people engage and prepare more fully for retirement.”
Mr Morrison plans to encourage more robo-adviser start-ups in Australia by giving them greater scope to test their services in the market without facing the costs of regulatory licensing.
The government is considering major changes to Australia’s 500 privacy and secrecy laws which could allow businesses and government to capitalise on the “enormous untapped potential of Australia’s data” by giving customers more control over their personal information and giving greater access to “anonymous government-held data”.
His government was “keenly aware” of the financial opportunities of data-sharing, Mr Morrison said in his clearest response to date to the Productivity Commission’s proposed liberation of government and consumer data.
The Productivity Commission, which will deliver its final recommendations to government in March, has been inundated with feedback from businesses, agencies and individuals about the future use of consumers’ data, receiving almost 350 formal submissions to its inquiry.
Mr Morrison said while concerns about consumers’ privacy were “understandable”, it was important that “new technologies do not become a victim of fear”.
“Yes, there are undeniable risks in enabling data to become more widely available. But the risk of harm needs to be assessed based on the likelihood and the scale of potential damage,” he said.
“After that happens, risk assessment and mitigation processes should be put in place for the release and sharing of data, as well as collection and storage.”
It has been five months since the Australian Securities and Investment Commission released its formal regulation on digital advice and already six robo-adviser businesses have entered the market, with expectations the number will more than double by the end of 2017.
However, the market regulator warns consumers that while robo-advice can be a cheaper option, it does not take into account a person’s goals and objectives or let the customer ask questions about the advice. Robo-advice is automated financial advice based on algorithms generated from information provided by the consumer instead of human financial advisers.
“The government is continuing to monitor the rules supporting new and innovative FinTech providers, such as robo-advisers, and the Treasurer has flagged an intention to develop an extended legislative regulatory Sandbox to provide further support in allowing such businesses to get up and running,” a spokesman for Mr Morrison said.
In Australia, robo-advisers do not have access to government-held individuals’ data like Centrelink payments so do not take into account the impact of investment decisions on tax planning or Centrelink payments.
Local robo-advisers include Stockspot, Ignition Direct, Quietgrowth, Acorns, SixPark and Clover, according to sharemarket trading website EFT Watch.
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