Robo-advisers financially unviable and flouting FCA rules, SCM warns

Warns of ‘next misselling scandal’

Carmen Reichman
clock • 3 min read

UK robo-advisers have come under attack in a scathing new report, which alleged their current business models were unsound and they could be breaking regulatory rules.

Investment management firm SCM Direct said current robo-advisers were ‘wired' to lose money and may go bust before ever acquiring the sizeable assets under management required to ensure their sustainability. The propositions also sway between guidance and advice, many without holding the relevant regulatory permissions, the research said. The firm warned far from being the solution to closing the ‘advice gap', robo-advice could be the "next misselling scandal" and urged the Financial Conduct Authority (FCA) to conduct a review of the sector. The regulator threw its weight behind ro...

To continue reading this article...

Join Professional Adviser

  • Unlimited access to real-time news, industry insights and market intelligence.
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters.
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection.
  • Members-only access to the editor’s weekly Friday commentary
  • 
 Be the first to hear about our events and awards programmes.

Join

 

Already a Professional Adviser member?

Login

More on Regulation