ESAsReport on automation in financial advice

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European Supervisory Authorities (ESAs)

Release date:
December 2016

European Supervisory Authorities, EBA, ESMA & EIOPA

The Report of the Joint Committee of the three European Supervisory Authorities (ESAs) – EBA, EIOPA and ESMA - concludes that the proliferation of automated advice, often referred to as robo-advice, is still at an early stage and the phenomenon is not equally present across the insurance, banking and investment sectors, currently having a greater prominence in the investment sector. The ESAs also note that financial advice in general is already addressed in various ways through a number of EU Directives.

The ESAs recognize the potential for growth of automation in financial advice, and will continue to monitor the evolution of the market, identify issues related to financial institutions' compliance with applicable EU laws and regulations, and assess the consequences of the phenomenon and its cross-border implications in the context of national supervisory frameworks and initiatives in their three respective sectors.

Automation in financial advice is the phenomenon whereby financial advice is provided to consumers without, or with very little, human intervention, and providers rely instead on computer-based algorithms and/or decision trees. The ESAs consulted on this topic in December 2015 to determine whether any action was required to ensure risks are mitigated while at the same time allowing market participants to harness the potential benefits of automated advice. The ESAs received 68 submissions in response to the DP from a wide variety of stakeholders.​

The three ESAs are mandated under Article 9 of their respective founding regulations to "monitor new and existing financial activities", "adopt guidelines and recommendations with a view to promoting the safety and soundness of markets and convergence of regulatory practice", and to "bring together all relevant competent national supervisory authorities with a view to achieving a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities." 

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