Discussion Paper on automation in financial advice

The Discussion Paper on automation in financial advice is available on the websites of the three ESAs: EBA, ESMA and EIOPA. This Discussion Paper published by the European Supervisory Authorities (ESAs) on automation in financial advice, aims at assessing what, if any, regulatory action is required to harness the potential benefits of this innovation and mitigate its risks. The ESAs have seen, with the increasing digitalisation of financial services, a growing number of financial institutions offering automated tools when providing advice or recommendations to consumers, often referred to as robo-advisors. These could potentially change the way consumers and financial institutions interact when buying or selling financial products. The Discussion Paper explains the concept of automation in financial advice, where a financial institution provides advice or recommendations to consumers without, or with very little, human intervention and rely instead on computer-based algorithms and/or decision trees, and highlights potential benefits and risks associated with this particular innovation.