The watchdog has published a guide on how digital advisory channels should go about offering services and products to retail investors.

As fintech continues to challenge traditional banking, Australia’s financial regulator has issued guidance on how digitally-powered products should be offered to retail investors.

The guide brings together some of the issues that digital advice providers need to consider when operating in Australia, ranging from the licensing stage through to the actual provision of advice, according to the Australian Securities and Investments Commission.

The documument also includes guidance on some issues that are unique to digital advice, such as how what is called the organisational competence obligation applies to digital advice licensees and how licensees should monitor and test their algorithms.

As “robo-advisors” have become part of the wealth management landscape, taking some of the human element out of how some portfolios are set up, for example, this has left regulators with the task of making sure investors obtain services suitable to their needs.

“In an environment where only around 20 per cent of adult Australians seek personal advice, we think that digital advice has the potential to offer an attractive, convenient and low-cost advice service to retail clients who may not otherwise seek advice,” ASIC said.

In March, ASIC released a consultation paper called Regulating digital financial product advice, which attached a draft regulatory guide on digital advice and sought feedback on a number of proposals. A total of 38 submissions were sent in.