Many auto advisers and automated discretionary investment managers risk poor outcomes for customers by falling short of FCA expectations.

By Nicola Higgs and Brett Carr

The Financial Conduct Authority (FCA) has issued a statement outlining its expectations of firms providing automated online discretionary investment management (ODIM) services and retail investment auto advisers (auto advisors). The FCA uses its statement to remind firms that the regulator’s rules, including those in relation to suitability and advice, apply equally to services regardless of the medium through which they are offered. Current providers and planned new market entrants should heed the warnings and the learnings of this statement.

What was the FCA analysing?

The FCA conducted two reviews:

• The first review looked at seven ODIM providers (at the time these firms represented more than half of the firms in this particular market).
• The second review looked at three auto advisers (being three of the early entrants to this nascent market).