Austrian Federal Economic Chamber, Division Bank and Insurance
In the area of innovation management there is a lot of potential regarding simplification and offer standardisation. Against the background of branch closures und the increasing client preferences there is an enormous potential for online-services. In securities business this model even exists much longer - with a rising trend.
The joint committee discussion paper on automation in financial advice seems to be partly dispensable for the time being.
As the paper refers to MiFID II we would like to stress that MiFID II intends to strengthen consumer protection. Yet, in fact the result of the implementation will be the exclusion of “small” consumers from recommendation. Financial institutions will only have few possibilities to receive inducements from their business partners. Consequently, society will be forced to rethink the actual banking system. If the costs to operate a branch is no quality enhancement anymore, the local consumer protection law has restrictions in implementing new or higher costs and charges, every entrepreneur - and by the way, a bank is an entrepreneur - has to find new possibilities such as taking fees for recommendation or other bank services. Otherwise the financial institution will not exist any longer because of the lack of profit. And the small consumer" with a small financial budget will reach his limits if he has to pay for every recommendation.
And now the automatic systems in financial advice are in cross fire, because of their potential risks for the consumers such as "limited access to financial information and products, to similar algorithms also. This seems a little bit ironic. Because of all that almost no financial institution will be able to offer free personal recommendation to everyone anymore. And every tool has to fulfill every respective EU regulation and consumer protection law which exits.
The paper itself stresses that automation specifically in relation to financial advice does not seem to be very widespread. Consequently, we are of the opinion that the ESAs are overstretching their mandate. We do not see that automation in financial advices is detrimental to the safety and soundness of markets. On the contrary, it helps to promote the digital single market and the financial inclusion. Thus, we see no need for any ESA intervention in that respect."