The Financial Conduct Authority (FCA) has given the red light to 30 advisory businesses looking to introduce a digital advice tool, a Freedom of Information (FOI) request, seen by International Adviser, has revealed.
The watchdog’s Advice Unit was set up in 2016 to provide regulatory feedback to firms looking to develop automated models to provide lower cost financial advice and guidance to consumers.
Since the programme was rolled out, the regulator has received 119 applications.
The 30 that were rejected did not meet the eligibility criteria needed to take part to the Advice Unit.
These include:
- Potential to deliver lower cost advice or lower cost guidance to unserved or underserved consumers;
- Genuine consumer benefit;
- Automated proposition;
- Clarity of proposal;
- Sector; and,
- Need for regulatory input.
Additionally, one firm decided not to develop a robo-advice model, following regulatory feedback from the FCA, the FOI showed.
Evolving processes
When the Advice Unit was introduced, there was a different application process as firms were only able to apply between May and July 2016 and between January and February 2017.
During the two periods the watchdog received 38 applications.
But in June 2017 the process was changed to allow advice businesses to apply for the programme all year long.
From June 2017 to January 2020, 81 application forms were submitted to the FCA.
The Advice Unit cost the FCA £1m ($1.1m, €1m), which includes salaries, flexible benefits, pensions and national insurance contributions between 31 May 2016 and January 2020.
There is currently the equivalent of 3.8 full-time employees working at the unit.
