A rigid and conservative culture of compliance means the financial advice profession is unlikely to be caught up if the government chooses to modify consumer protection laws for AI.

Treasury launched the ‘Review of AI and the Australian Consumer Law’ consultation earlier this month, which aims to seek industry views on whether consumer law remains suitable to support the responsible use of AI by business and consumers alike.

While it does not directly reference the advice profession, the mention of consumer protection could implicate the advice profession and the service providers.

DASH Technology Group chief executive Andrew Whelan tells Professional Planner the advice profession has been “so hammered by regulation to date” and consequently advice firms are taking “a pretty conservative approach”.

“They’re so conditioned…by the ethic of the current regulations to think of risk first, because it’s such a threat to their business and their livelihood.”

Despite a notable growth of AI adoption in advice businesses to improve productivity, Whelan says they are still vigilant about the risks.

This has been backed up by recent comments from compliance experts; Integrity Compliance has suggested gaining client consent for using AI, while Assured Support believes client data shouldn’t be mixed with AI at all.

Whelan says the advice industry “sees risk first through the nature of having to protect themselves”. The cautious nature of the advice profession means AI is used more responsibly than in other industries.

“No one’s denying that advisers would be the last people to rally against responsible use of data,” Whelan says.

Although excessive regulation is possible, it is very early to jump to conclusions that AI will be regulated out of fear as it is only beginning to be used widely.

“It’s just natural to assume that the regulation coming down the pipe will be onerous and harm the possibility of more Australians getting advice.”

AI platform Paradino co-founder Alex Gassner says AI is “in such an infancy that the government’s just trying to get their head around it”.

“I don’t think the government is coming to wield some big regulation wand and force everyone to be super inefficient,” Gassner says.

Wheelan and Gassner both spoke to Professional Planner last year about how their respective services were incorporating AI technology.

While Gassner supports some regulation, it requires an “open mind” to ensure each industry has the right level of legislation as the advice profession uses less AI than most other industries.

“The government’s probably going to have a broader approach in terms of high level and what AI looks like, but then also have some flexibility around their regulation to industry level, because obviously each industry has different use cases of it,” Gassner says.

If the government chooses to implement regulation that affects advice businesses for the worse, it will likely take a few years.

Fourth Line chief executive Joel Ronchi agrees with Gassner, adding that industries will soon require AI usage regulations to be in place. However, he believes “a lot of [advice] firms haven’t really embedded it into their day to day” operations.

“If we put the consultation paper to the side, I think there is a general awareness that the industry, not just advice, will need to have AI governance structures in place,” Ronchi says.

“Ultimately, [AI regulation] will permeate into most industries, including financial advice.”

However, Ronchi believes any regulation will be focused on awareness rather than restriction.

“Advisers are going to have to be aware of when they’re using AI, how they’re using AI, and disclosing that to clients as and where,” Ronchi says.

Ronchi considers the Treasury review as the Australian government trying to “kickstart the ball” when it comes to AI regulation as it is the word on everyone’s lips.

“Where do you start? You start at consumer law, because consumer law is so broad, and then it’ll cascade down from there. So, I think everyone’s still fine with all this.”

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