ASIC nudges robo-adviser to shutter

A digital advice firm has voluntarily shut down two robo-advice tools after ASIC raised concerns.

Lime FS, a Sydney-based Australian financial services licensee, was running corporate authorised representatives Plenty Wealth, Plenty Plus and Lime Wealth as digital advice providers authorised to provide financial advice to consumers.

Plenty Wealth was an online tool with a focus on budgeting, life insurance reviews, tax and investment and superannuation recommendations.

Plenty Plus provided advice on the establishment of self-managed super funds, purchasing property with super, commencing and ceasing pensions and contributions into super.

ASIC raised concerns with Lime FS about the quality of advice being generated by the robo-advice online tools and its ability to monitor that advice.

ASIC said in some instances the recommendations generated by the tools were in conflict with client goals or with other recommendations also generated by the same tool, however a spokesperson from Lime FS disputed this.

The spokesperson told Financial Standard that Plenty and Plenty Plus have not received any complaints from customers and have actually only had positive feedback.

Between the two services, Plenty and Plenty Plus produced approximately an average of one statement of advice a day across both services.

The regulator expressed concerns that the level of inquiries made by the robo-advice tools about client goals, needs and financial situations were inadequate.

Lime FS decided to close both tools. Both websites are now defunct.

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 licensees and financial advisers using or recommending digital advice tools to ensure that they adequately monitor and test the advice for quality and appropriateness."

Consumers who are concerned about advice they received from Plenty Wealth or Plenty Plus can lodge a complaint with Lime FS or with AFCA or obtain independent legal advice.

Plenty was a finalist for the Excellence in Wealth and Investment category in the Finnies, the annual Fintech Australia awards, last year.

Josh Golombick and Greg Einfeld were listed on LinkedIn as co-founders in Plenty and Plenty Plus.

Plenty said in a statement: "Through our dialogue with ASIC, we have formed the view that it is overly challenging to provide holistic digital advice within the constraints of the existing regulatory framework.

"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.

"Given the above, the Plenty Wealth and Plenty Plus businesses will cease providing advice."

The company said that it believes the regulatory framework should be reviewed in order to better facilitate holistic digital advice.

Read more: ASICDigitalPlenty PlusLime FSPlenty WealthDanielle PressFinniesFintech AustraliaGreg EinfeldJosh GolombickLime Wealth
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