By Paul Feeney, Founder and Chief Executive Officer, Otivo
Nearly two thirds of Gen Z Australians say they trust AI platforms for money advice, and one in six say they trust them completely. That's ASIC's own research, published in March 2026. What almost none of those people have been told is that in Australia, "financial advice" is a legal term with a licence attached to it, and most of the AI they're asking isn't giving them any. Here's where the law draws the line, what sits on each side of it, and why the distinction is worth more than a technicality.
AI financial advice is legal in Australia, but only where an Australian Financial Services Licence sits behind it. Providing personal advice is a regulated activity under the Corporations Act. A general-purpose AI tool holding no licence can give financial information only. ASIC's Regulatory Guide 255 sets out how those obligations apply to automated advice.
What counts as financial advice in Australia?
Financial advice has a statutory definition, and it's narrower than everyday use suggests. Under the Corporations Act, financial product advice is a recommendation or opinion intended to influence someone's decision about a financial product. The moment a service crosses into that territory, licensing obligations attach.
That definition catches a lot less than people assume, and a lot more than they expect. An article explaining how the concessional contributions cap works is factual information. A recommendation that a 41-year-old on $95,000 with $180,000 in super redirect part of their pay into it is personal advice. The words might look similar on a screen. Legally, they're different activities with different consequences.
The distinction matters because it determines what protections exist when something goes wrong. Factual information carries none. Personal advice carries a best interests duty, a documented record, and access to external dispute resolution.
The three tiers of financial guidance, in order
Australian regulation recognises three distinct tiers, and every money question you ask lands in one of them.
- Factual information. Objective, verifiable statements with no recommendation attached. The superannuation guarantee rate is 12%. The general concessional contributions cap is $32,500 for 2026-27. No licence required, no duty owed, no recourse if it's wrong.
- General advice. A recommendation or opinion about a financial product that doesn't take the individual's circumstances into account. This requires an AFSL and a general advice warning, and it's the tier most financial media and most product marketing sits in.
- Personal advice. A recommendation that considers one or more of the person's objectives, financial situation or needs. This requires an AFSL, triggers the best interests duty in section 961B of the Corporations Act, and comes with a Statement of Advice.
Most Australians asking an AI about their mortgage or their super think they're getting the third tier. In almost all cases, they're getting the first.
Can a general-purpose AI tool give you financial advice?
No. A publicly available general-purpose AI tool holds no Australian Financial Services Licence, so it cannot lawfully provide personal financial advice to Australian consumers, regardless of how personalised the answer looks.
ASIC's Moneysmart published consumer guidance on this in March 2026, in response to research showing 18% of Gen Z Australians were already using AI platforms for financial information and 63% were confident in its accuracy. The guidance is measured rather than alarmist: it acknowledges these tools are genuinely useful for summarising complex material and answering general money questions, while setting out limitations that can lead to inaccurate or inappropriate suggestions.
The gap isn't really about fluency. A general-purpose model writes a confident, well-structured answer whether or not it has the Australian rule right, and it knows nothing about the person beyond what happened to be typed into the box. It can't distinguish a 26-year-old with no emergency savings from a 62-year-old three years out from retirement unless told, and even then it has no obligation to weigh that properly.
What does an AI service need in order to give personal advice?
An AI service can give personal financial advice in Australia if it operates under an AFSL and meets the same obligations a human adviser does. ASIC set out how in Regulatory Guide 255, published in August 2016, which covers licensing, organisational competence, algorithm monitoring and testing, and the minimum steps an automated service takes to satisfy the best interests duty when providing scaled advice.
The principle ASIC has applied consistently since is that the obligations are technology-neutral. In Report 798, its October 2024 review of AI adoption across 23 licensees, the regulator reiterated that existing obligations apply to licensees' use of AI and that the law doesn't bend around new technology. A licensee remains accountable for what its algorithm produces.
Four things follow from holding the licence, and they're the practical difference a consumer feels.
- A duty to act in the client's best interests, not merely to answer the question asked.
- Advice that is documented and retained as a record, rather than vanishing with the chat window.
- Access to internal complaints and to AFCA, the external dispute resolution scheme, if something goes wrong.
- Compensation arrangements the licensee is required to hold.
Where does AI genuinely help with money questions?
AI is at its most useful before a decision, not at the moment of one. Moneysmart's guidance names the good use cases directly: breaking down complex information, answering general questions, and pointing towards what to research next.
That's not a small thing. A 38-year-old who understands what a concessional contribution actually is before they open a calculator makes a better decision than one who doesn't. Many Australians find the barrier isn't the decision itself so much as not knowing which question to ask first. The honest position is that general-purpose AI is a strong learning tool and a weak decision tool, and the two get confused because they produce text that looks identical.
Frequently asked questions
Is it illegal for AI to give financial advice in Australia?
It's not illegal for a service to use AI to provide financial advice. It is unlawful to provide financial product advice to retail clients without an Australian Financial Services Licence or an authorisation from a licensee. The licence attaches to the provider, not the technology, so an AI-powered service operating under an AFSL is lawful and one operating without one is not.
Does the best interests duty apply to advice generated by an algorithm?
Yes. The best interests duty in section 961B of the Corporations Act applies to personal advice regardless of how much of it is automated. ASIC's Regulatory Guide 255 sets out the minimum steps a digital advice provider takes to satisfy it, including clearly explaining the scope of the advice and building the algorithm so that it declines to advise where the scope is too narrow to serve the client properly.
Can I complain if AI financial advice turns out to be wrong?
That depends entirely on whether a licensee stood behind it. Advice from an AFSL holder can go to the licensee's internal complaints process and then to the Australian Financial Complaints Authority. An answer from an unlicensed general-purpose AI tool has no equivalent pathway, which is the practical reason the licensing question matters more than it sounds.
Where does Otivo sit?
Otivo is a digital advice service operating under AFSL and Australian Credit Licence No. 485665, which means the advice it produces is personal advice under the Corporations Act, grounded in the member's own balances, income and goals, and subject to the same obligations that apply to any licensed provider. If you want to see what that looks like on a real question rather than in the abstract, the retirement planning module works from your actual position rather than a general rule, and the super investment options tool does the same for how your super is invested.
Sources
- ASIC Moneysmart, AI and money decisions, published 23 March 2026. moneysmart.gov.au
- ASIC, Regulatory Guide 255: Providing digital financial product advice to retail clients, August 2016. asic.gov.au
- ASIC, Report 798: Beware the gap — Governance arrangements in the face of AI innovation, 29 October 2024.
Disclaimer
The information in this communication is current as at September 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.