ASIC expects AFS licensees and financial advisers who use AI tools such as ChatGPT to maintain full responsibility for the quality of advice, compliance outcomes, client confidentiality, and regulatory obligations. AI use is permitted when appropriate controls exist, but it does not transfer accountability. Any AI-generated content used in advice, compliance, client communications, or decision-making must be reviewed, verified, and approved by competent staff before use.
Expanded Answer
There is no specific prohibition on using AI tools within a financial advice practice. However, existing obligations under the Corporations Act, ASIC regulatory expectations, privacy laws, recordkeeping requirements, and AFSL compliance obligations continue to apply. The regulatory position is that AI is a tool used by the business, not a substitute for professional judgement or compliance oversight. Responsibility remains with the adviser and the AFS licensee.
For advice businesses, AI controls should address accuracy, governance, privacy, confidentiality, recordkeeping, and oversight. AI-generated content should be treated as draft material rather than verified advice. Advisers must review outputs for factual accuracy, suitability, compliance with the client’s circumstances, and consistency with legal and regulatory obligations. Client information entered into AI systems should be managed in accordance with privacy and information security requirements, with particular attention to sensitive personal information.
Key obligations:
- AI-generated content must be reviewed and approved before use.
- Client confidentiality and privacy obligations continue to apply.
- Advice suitability, best interest obligations, and disclosure requirements remain unchanged.
- Recordkeeping obligations apply to advice processes regardless of whether AI was used.
Regulatory scrutiny increases where AI is used in high-risk activities such as advice generation, compliance assessments, client communications, disclosure preparation, or decision-making without adequate human oversight.
Why it matters
AI can improve efficiency, but inaccurate outputs, privacy breaches, inadequate supervision, or overreliance on automated content can create significant compliance and conduct risks. ASIC increasingly focuses on governance, accountability, and whether firms can demonstrate effective oversight of technology used in regulated activities.
Unsure how this applies to you?
Get a clear answer in a 15-minute call with a compliance specialist. Book your call
Practical guidance
- Establish a documented AI governance policy covering approved uses, review requirements, and accountability.
- Require human verification of all AI-generated advice, compliance content, client communications, and regulatory assessments.
- Assess privacy, cybersecurity, and recordkeeping controls before entering client information into AI systems.
Further reading
AI in financial advice: efficiency gains, compliance risks and cognitive costs
The hidden risks of AI: ASIC’s review of licensees’ embrace of artificial intelligence
From draft to delivery: the responsible AI for high-stakes writing story