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DA-2.1.2

Licensees providing digital financial advice must:

(a) have appropriate system design documentation that clearly sets out the purpose, scope and design of the algorithms;
(b) establish decision trees or decision rules as part of the documentation, where relevant;
(c) establish controls to detect any error or bias in the algorithms;
(d) have appropriate processes for managing any changes to an algorithm which must include security arrangements to monitor and prevent unauthorised access to the algorithm;
(e) be able to control, monitor and keep records describing any changes made to algorithms (one way of doing this may be to store different versions of the algorithm electronically);
(f) review and update algorithms whenever there are factors that may affect their relevance (e.g. market changes and changes in the law);
(g) have in place controls and processes to suspend the provision of advice either when there are two or more conflicting answers to the risk profiling questions or when an error within an algorithm is detected and that error is likely to result in client loss and/or a breach of client agreement or laws and regulations;
(h) have in place an appropriate internal sign-off process to ensure that the steps above have been followed; and
(i) perform compliance checks on the quality of advice provided by the client-facing tool. This must include post-transaction sample testing.
Added: April 2019