Politicians of all models lined up to laud the robots as the Financial Services Legislation Amendment Bill (FSLAB) passed its second reading in Parliament last week.
In a largely consensual debate, Labour, National, NZ First and Green MPs welcomed the imminent legalisation of robo-advice under FSLAB.
Michael Wood, Labour MP, said a key part of the bill was “the level of innovation that comes through in this bill in respect of not requiring natural persons to have to give the advice”.
National MPs Paul Goldsmith (who was on the FSLAB select committee), Jacqui Dean, Melissa Lee and Brett Hudson also endorsed the advice automatons of the future noting robo-advisers could deliver cheaper and more effective services to a broader range of New Zealanders than ‘natural persons’ have managed.
Hudson, in particular, talked up the robo-advice potential in the coming age of artificial intelligence (AI).
“We will see artificial intelligence have a far greater role to play, particularly when that institution knows the person that calls them, and particularly if they are an existing client and they have a great deal of information on their position and their current investments,” he told the house.
“Actually, that is a good thing. It is a good thing if it’s used well, because any company—in this case, a financial services company—can offer enormous value to their clients if they take what they know about them, what they know about products and services, what they know about markets, and what they know about other investors.
“They can tailor advice to them that is beyond the absolute basic and can be of greater future value to that client. But if it’s done poorly, it could also result in if not financial harm to that client, certainly a sub-optimal outcome.”
Likewise, National’s Melissa Lee said that the “AI technology that people talk about, actually, puts us in a space where, instead of having real people providing financial advice”.
“… there are technical things that even robots can actually do, and, hopefully, the regulatory regime that actually removes requiring the natural persons to be the only ones who can actually do this will provide the banks to provide sometimes simple advice—and some more complex ones—that robots can actually provide to the customers,” Lee said.
The National enthusiasm for an AI-enhanced advice industry was matched by Green MP Gareth Hughes – in a rare moment of agreement across the political divide.
“… it’s good to be taking steps when it comes to robo-advice, but [Hudson] was absolutely right: we need to be preparing for the likes of artificial intelligence, blockchain, crowd computing—all the sort of modern clichés,” Hughes said. “But this is going to transform the financial market sector.”
The Green MP also said the digital financial revolution might even help wean New Zealanders off speculating on house prices.
“That’s why I’m so looking forward to the tax working group coming back, because we need to make sure we’ve got the tax settings right for the financial services,” Hughes said.
The interim Tax Working Group report is due for publication this week.
Amid the robo-politico singularity, Labour’s Wood reminded Parliament that, for now, the financial industry was still a ‘natural persons’ business.
“My own select committee, the Finance and Expenditure Committee, will next week be receiving submissions from a number of organisations in respect of the Australian royal commission into banking issues,” Wood said. “So it’s very much top of mind for our select committee, while we have not considered [FSLAB] the issues that go to the heart of consumers being able to have confidence in the financial advice that they receive when they go to experts in receipt of advice that is principled and will provide them with good avenues to invest their hard-earned money.”
FSLAB is ranked 16th on the latest Parliamentary order paper to enter the whole of house committee phase which, barring any major edits, should be shortly followed by its final reading.
The proposed law will, among other wide-sweeping changes, legalise robo-advice, which is currently only permitted in limited form under a Financial Markets Authority (FMA) exemption.
Just two providers – Kiwi Wealth and Nikko Asset Management – have to date been granted FMA robo-exemptions with neither yet fully activated.