UK’s FCA Advice Unit working with nine firms on robo-advice platforms
The UK’s Financial Conduct Authority's Advice Unit has accepted nine companies out of 19 applications to help them develop lower cost automated advice platforms. The FCA plans to provide regulatory feedback and will share publicly the knowledge gathered from the project to benefit the industry's development of robo-advisers. The FCA’s fintech Sandbox has also accepted 25 applications from a range of sectors.

"Eight are established financial services who want to bring automated advice to the market at scale"

The Advice Unit, similar to the FCA's Sandbox, opened for applications in May this year and received 19 applications in the initial tranche.

Speaking at the BBA FinTech Banking Conference, Christopher Woolard, Director of Strategy and Competition at the FCA, confirmed that nine firms were successful and of these, "eight are established financial services who want to bring automated advice to the market at scale".

Woolard added that firms who were not successful have received feedback to help them understand why they did not meet eligibility criteria, and have the option to reapply when the FCA opens its next cohort.

The nine successful firms have begun the process of engaging with the Advice Unit, who will seek to provide regulatory feedback on the automated advice models they are developing.

The FCA's Sandbox has also accepted 24 applications to develop towards testing.

The Sandbox enables firms to test new ideas without incurring all of the normal regulatory consequences.

The FCA says the 69 applications "far exceeded" its expectations. It has also offered assistance via Project Innovate or other colleagues to 40 of the applicants, in some cases to prepare for the next cohort of the Sandbox.

The applications covered a range of geographies, both domestic and international, as well as a range of sectors. Four came from retail banking, four from insurance firms, three covering advice and profiling and three related to IPO. There was also one application each for digital identity, disclosure and the mortgage sector.

Woolard continued: "They also came in all different sizes – including from challengers and incumbents. We have also seen incumbents and start-ups create partnerships – the incumbent bringing established systems, distribution channels and customers and the start-up bringing new technology and fresh insights."

True Potential is one of the firms that has been accepted onto the FCA's robo-advice unit.



Managing Partner David Harrison commented: “We want to close the advice gap which we have seen emerge in recent years. We service tens of thousands of auto enrolment client, many of whom fall into the advice gap, so robo is one way of helping them achieve better outcomes. We can provide quality advice at a lower cost, to people who ordinarily wouldn’t speak to a financial adviser.



“We have the capability to create a robo-adviser unlike any other firm in the industry. Due not only to our size and the data we collect, but also the skills of out in-house development team and data scientists, we can explore options which are years away from our competitors.”

“We’re working closely with the FCA to discuss this in more detail and to get some preliminary feedback on our robo adviser. We want to make sure we can improve the outcomes for consumers from the beginning. Once we’ve engaged with the FCA and discussed the regulatory challenges, we can focus on the technical challenges.”

The FCA will share publicly what it has learnt from the Advice Unit’s interactions with firms, in order to give greater clarity to the industry on how to take an automated advice model forward.

It will begin to publish these resources on the FCA website for all firms developing automated advice models in early 2017.