In a statement commenting on the FPA’s submission to the consultation process on the draft SOA, FPA head of policy and government relations Ben Marshan said that while the professional association supports ASIC’s aim to develop a new example SOA template, further amendments are required.
While the FPA supports efforts to increase fee disclosure to consumers, Mr Marshan questioned the current placement of this information within ASIC’s draft.
“We do not think it is appropriate for the SOA to begin with fees and remuneration disclosures,” Mr Marshan said. “While an SOA is a disclosure document and not the client’s financial plan, it should still be aspirational.”
The FPA’s submission also argues for the inclusion of icons, symbols, graphics, audio and video to create a more engaging information delivery process for consumers.
“As smartphone and tablet use make up 63 per cent of total time spent on devices in Australia, ASIC should further consider how it can encourage the digital delivery of advice using mobile technology,” Mr Marshan said.
The AFA has also taken issue with elements of the example SOA, including similar criticism of the early placement of remuneration disclosures.
“We do not believe that the design of SOAs is improved by the inclusion of commissions on page one of the SOA,” the AFA said in its submission to Treasury.
“There is no benefit in disclosing the commission’s prior to the inclusion of the recommendations. At that stage they have no context.”
The AFA also explained that modification of SOAs can be a costly exercise for licensees or practices and that the regulator should factor this in.
While both associations stopped short of describing the example SOA as “rubbish”, as Nick Topham of Clique Paraplanning recently did, the submissions indicate a level of unity among the financial advice profession in arguing for reform of the current SOA template.
ASIC writing SoA’s is like the National Transport Commission drafting the design of cars.
Stick to writing rules. Nothing good ever came from Gov bureaucrats attempting to go beyond their brief.
…and how about modifying the rules so they’re fair across all industry participants, like the ISA?
Seems absolutely clear to me that ASIC are hell bent on doing everything they possibly can to force advisers OUT of this industry so that only their crooked left-wing mates in the industry superfunds are left to screw the industry over.
How much more can a risk adviser say in their SoA other than to clearly show “here’s your insurance, here’s your premium, here’s what I get paid for the first year and here’s what I earn to service you every year after that, that your policy remains in force.” ?
What am I missing here or is this new SoA template only for super, investments and estate planning?
[i] “only their crooked left-wing mates in the industry superfunds are left to screw the industry over”[/i]
Sorry, but this statement is misleading and deceptive. It should read “only their crooked left-wing mates in UNION superfunds are left to screw the industry over”.
[i]“While an SOA is a disclosure document and not the client’s financial plan, it should still be aspirational.”[/i]
This really is a poor attitude and one that is rapidly fading into obscurity.
Statements of Advice are never going to go away and for too long they have been viewed as a disclosure document that the client skips through and signs at the end, which is part of the reason we are in our current position.
There is a huge opportunity for advisers to improve their adviser delivery through an attractive and well structured SoA. This opportunity is being squandered due to lack of time by practices and lack of care by their licensees. The least that professional organisations could be doing is promoting improved advice delivery, rather than resigning themselves to “aspirations”.
The FPA “supports efforts to increase fee disclosure to consumers”? Why? There is already a huge amount of mandatory fee disclosure in SoAs. This is exacerbated by compulsory Fee Disclosure Statements, Opt-In Notices, and the fees disclosed in product provider’s statements. Consumers are drowning in fee disclosure. There is so much fee disclosure it is more of a hindrance than a help. And it adds to consumers’ advice costs due to the extra time and processes advisers need to allocate to it.
Surely the lesson of the last 15 years or so since FSR is that more and more disclosure is NOT the answer. Consumers just tune out when there is too much disclosure. The FPA should be lobbying for focused and concise disclosure, particularly now that consumers have the additional protection of the advice being subject to Best Interests Duty.
Sorry, but at the risk of being trolled as a pedant, we have always have had “best interest” duty -it predates ASIC by centuries. Its common law – an adviser who takes money to invest, or takes premiums to protect, has ALWAYS had that fiduciary duty to the client. All ASIC did, like Napoleon, was to codify existing common law into a statute just to look good.
good comment Old Risky. And you dont have to be “old” to know that. Half of todays laws look back to common law obligations that go back decades and even centuries. its a myth that advice has been un/ under regulated until recent years. we shouldnt get into the over/under regualtion argument but the “what is right argument@ – cant simply be assesed on volume.