[GRTV] FMA puts AI advice and banks’ return to wealth management under spotlight

Artificial intelligence and the prospect of banks moving back into financial advice are emerging issues for the Financial Markets Authority following its landmark Access to Advice research.

In the second part of a GRTV interview with FMA director of deposit taking, insurance and advice Michael Hewes, the regulator discusses the growing use of AI by consumers and advisers, vertical integration and what happens next following the report. Hewes says AI will be a particular focus for the FMA over the coming year as it builds its own capability and works with industry organisations.

The regulator sees AI as a potentially valuable tool for advisers, but Hewes warns about the technology’s tendency to produce incorrect information, or “hallucinations”. For consumers using AI directly for financial guidance, the message is to test its recommendations and, where appropriate, put a “human set of eyes” over the results.

Hewes says regulators internationally are grappling with the same challenge. The FMA is looking at work being done by overseas counterparts, including Australian and UK regulators, as it considers what guardrails may be needed. The interview also explores whether banks and other vertically integrated financial institutions could play a bigger role in advice.