Is robo-advice the next mis-selling scandal?

In a scathing report, SCM Direct said it has found "little evidence of robust innovation", and that robo-advisers are ‘wired’ to lose money.
 
Its research estimates that the average UK robo-adviser receives revenue of just £147.50 pa per account, but the cost of acquisition is at least £180, plus "considerable additional annual business costs".

It claims that "one well known UK robo-adviser firm" reported costs in its latest available accounts of £9.42 for every £1 of revenue.

SCM Direct also estimates that an average UK robo account would need to be invested for nearly 11 years to reach profitability. However, its findings show the average holding period for a robo-adviser client may be just 3 years, partly the result of many targeting the ‘millennial’ market.
 
Additionally, it claims that 80% of websites use risk questionnaires but 25% of these firms did not possess the regulatory permission to give advice to retail clients.

In its report, SCM says that evidence from a sample of 10 UK rob-adviser firms reveals "misleading performance illustrations, questionable statements regarding fees, a reliance on risk questionnaires, missing pages of key legal documents, and questionable claims".
 
Gina Miller, co-founder of SCM Direct, said: Our conclusion is that there is little evidence of robust innovation, as new robo-advisers appear to be fundamentally financially unviable and/or seem to be regularly flouting key FCA rules. It’s time the FCA to step in and protect consumers from the various issues raised in our report, which their US regulatory peers are already addressing."