Joint Committee of ESAs Report on Automation in Financial Advice


Over the past two years the Joint Committee of the European Supervisory Authorities (“ESAs“) have been undertaking a monitoring exercise on the evolution of automation in financial advice in the securities, banking and insurance sectors. On September 5, they published a report setting out their results, and made the following conclusions:

  • Analysis shows that while automation in financial advice seems to be slowly growing, the overall number of firms and customers involved still seems to be quite limited.
  • The risks and benefits of automation in financial advice, which were originally identified by the ESAs in their original discussion paper and related report, have largely been confirmed by national competent authorities and seem to be still valid.
  • In terms of emerging business models, it appears that automated services are being offered through partnerships, by established financial intermediaries, rather than by pure FinTech firms.
  • While some new trends seem to have emerged (such as the use of Big Data, chatbots and extension to a broader range of products), there seems to have been no substantial change to the overall market since the publication of the ESA report on automation in financial advice in December 2016

The ESA considered that as there has been limited growth of automated financial advice and a lack of materialization of identified risks, no immediate action by the ESAs is necessary. The ESAs also stated that no new monitoring exercise will be undertaken until the market has further developed enough for a third monitoring exercise to be deemed warranted.