Lawyer Philippa Hann, partner at Clarke Willmott Solicitors in Bristol, explained the imminent raft of data law that is coming and how misuse of clients’ information could land planners in hot water.

She also warned planners artificial intelligence may be part of the next generation of automated advice models.

Risks are plentiful for those getting into robo-advice, she told delegates at the CISI Financial Planning Conference today.

She said: “If you are considering going down the robo-advice route and you want to incorporate that into what you do, I think you need to do as much due diligence into that platform as you can.

“A huge piece of this is the data. You will be gaining a lot of data from your clients.”

More ‘onerous’ EU rules are on the way in an attempt to protect people, she explained, because the amount of data is ‘huge’ and how it can be used is ‘frightening’.

The General Data Protection Regulations are coming in on 25 May 2018 so “whatever happens in Brexit they will parachute into our laws”, she explained.

Consent must be given quickly, explicitly and on informed basis in future, delegates were told.

Specific consent from clients will have to be gained if planners are using it for marketing, including who they share that with.

Companies won’t be able to use the general phrase sharing with 3rd parties in future, she warned.

She said using data for anything other than advice for the client will require getting explicit consent on an informed basis.

She warned planners to be “very careful” about how they use that data.

She cautioned that anyone offering advice rather than guidance could be sued for breach of statutory duty or negligence if they are not careful.

She said: “You need to make sure you know who has what rights and responsibilities.

“Work out who owns the data, who is the controller, have policies in place.

“Who will pay for any changes in relation to that data?”

Another consideration is the relatively new ‘right to be forgotten’, following a landmark legal case.

Ms Hann said data laws are likely to be rapidly changing.

She said: “I can see data legislation being equivalent to pensions and changing very quickly.”

Although Robo-advice is “currently in version 1.0 which means there isn’t a huge amount of robo or a huge amount of advice”, the Government is pushing it, as shown with FAMR and thus, has a “very real place”, she said.

She said: “Robo-advice 2.0 is a really interesting piece because all the writings you see from people generally say it’s a flash in the pan, it won’t affect us.”

For those dismissing it though, she warned, that there were signs they should be taking note.

She cited Glasgow University, which she said has developed technology that will read non-verbal communication, meaning that the argument that robo-advisers can’t understand emotions may become defunct.

The next iteration of automated advice models will move from being just mass market into a different, potentially more niche sector, she believes.