Automation in financial and advisory services is growing, and European Supervisory Authorities are not taking immediate actions, nor has the European regulator set forth any rules in order to drive the innovation towards a preferred path and standards. This level of freedom allows fintech firms to perform more than one activity and be able to provide more than one service alternative to those provided by banks, financial intermediary or insurance companies.

The Joint Committee Report of the ESAs on the results of the monitoring exercise on 'automation in financial advice' (2018), in its conclusions, does not remark on any significant change in the previously-identified risks. However, considering the overall importance of the topic, ESAs highlights the emergence of ongoing changes to the current business models of fintech firms.

In this context, regulatory issues are related to the algorithms supporting the partially automated activities in banking (with regard to credit enhancement), finance (and portfolio management) and insurance (and other advanced technique of risk mitigation). Today, the absence of any significant change of the national legislative framework should suggest a complete freedom in starting up a fintech firm. However, AFM (the Dutch Authority) lists its expectations for further development of automated advisory services in the financial sector, and other national authorities are dealing with the possibility to publish specific guidelines in order to clarify whether public intervention shall oversee the servicing of certain fintech activities (which are the 'perfect substitute' of regulated activities such as banking, finance and insurance).

In this perspective, we should consider that banking and banks are both regulated. And the same is true for asset management and managers, finance and financial firms, insurance and insurance undertakings. This leads to the conclusion that regulators could make no distinction between automated and physical provision of regulated activities. Therefore, both shall meet the same high-quality standards and duty of care, in order to satisfy the need to protect consumers/savers.

We expect that the success of fintech firms will give rise to authorizations and regulatory perimeter issues, due to the impact of innovation on traditional business models, with regard to prudential risks and conduct issues. The same refers to anti-money laundering regulation and the need for money to flow through the safest conduits.

Lastly, any fintech firm is going to be able to provide automated advice for banking and financial products. The common approach to automated advice is based on the application of machine learning, and therefore there are specific rules on the classification of data (and linear regression) having regard to the statistical inference (as it provides the foundation for most of the methods covered). This requires a high level of accuracy for the client onboarding and therefore also in the setting up of any relation between the output of the data made by a client (provided as a human) and the collection of the same by the firm (prepared by a machine).

From another perspective, strict rules shall control the information that should be provided to clients on investment advice and portfolio management services. Indeed, when these services are provided through an automated tool, the algorithm chooses both what information should be provided and how information should be illustrated to clients. The algorithm chooses 'what and how' from amongst a set of combinations made by the firm, so that there is full responsibility of the managers for setting up both the algorithm and information.

Today, fintech firms must rely on advance tools for assessing the suitability of credit, financial product and insurance policies, with particular attention

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