ASIC said in a statement that Consultation Paper 284 (CP 284), Example Statement of Advice for life insurance: Update to RG 90, seeks feedback on the new example SOA and related updates to the guidance in Regulatory Guide 90 (RG 90), Example Statement of Advice: Scaled advice for a new client (RG 90).
The review was conducted as part of the Life Insurance Framework announced last November by Minister for Revenue and Financial Services Kelly O’Dwyer.
ASIC noted that the design of the example SOA was informed by behavioural research into how people find and understand the information in SOAs, and illustrates how an adviser can produce a compliant SOA that is concise, structured in a way that is easy to follow and written in simple, plain English.
The development of the new example SOA follows a number of policy developments in the retail life insurance sector that have highlighted the need for better SOAs, the corporate regulator said.
ASIC also said it was asked by Ms O’Dwyer to consider prominent upfront disclosure of commissions in SOAs, and CP284 forms part of this review.
ASIC deputy chairman Peter Kell said the SOA should not be designed as a mechanism to protect advisers against liability or as a compliance tool.
“ASIC has consistently emphasised that the purpose of an SOA is to communicate to the client important and relevant information about the advice they receive,” Mr Kell said.
“We welcome feedback that will help advisers achieve this objective.”
The new example SOA will replace the example SOA set out in RG 90 and will close submissions on 31 July.
Personally I’m not sure on the part about there being no fee, I will be charging them a fee given the reduction in the commissions which are being proposed. In relation to the actual document it was too long and full of waffle. I particularly liked the risks, you are at risk if you are insured and also if you aren’t. I’m also not sure the most important part of the document is the commissions on page 1, I would have thought you might start with the what is important part to you but then maybe I have a different perspective to ASIC.
The article implies that the reason commissions are given such prominence is because O’Dwyer asked for it. O’Dwyer is also the one who made it legal for the big insurance companies to collude to reduce commissions. O’Dwyer is the one who is trying to do something similar in mortgage broking. O’Dwyer has a pathological hatred of commissions for some reason. She is doing everything she can to remove them, even though it actually increases costs for consumers and/or forces them into junk products. Turnbull needs to sack her from her job immediately. No wonder Peta Credlin is trying to replace her in her seat.
Hmmm, so the most vital component of providing full and professional risk advice to a client is to use page one of the SoA to tell them multiple times how much ‘evil’ commission is earned! And here I am thinking the arranging of the client’s well thought out personal protection plan was the most relevant part of providing them with ‘advice’. I concur – ‘Just before we arrange your $750k Life & TPD cover I just need you to read this 27 page document and sign on the last page…’ Yeah, right!
Good thing it’s just an example, I would never use it. It’s still too far long and waffles on. A client would not read it through. Certainly paints us a product sellers, not advice providers with the commission disclosure on the front in addition to the usual locations.
Risk commissions front and centre and prominent in this new SoA creation eh?! The writing is on the wall that life companies and regulators want risk commissions gone. For some reason they don’t have the guts to make it happen in one fell swoop. Interesting. I’d give it ’til 2022, latest, before they get their way . . . then watch the underinsurance problem explode without proper risk advisers. Life companies will reap what they sow. Not all of them are guilty of driving advisers out, just most of them. Their striving to save themselves the cost of commission will backfire like nothing else before. Little do they know.
Hey great news everybody….now that we with ASIC are working towards an SOA for risk….does this mean we can stop churning or is it best interest….this should be fun. Grab the popcorn for this spell binding story on how ASIC will fix the day….like the time regulators seemed okay with vertical integration….come back Timbercorp Great Southern Prime Property Trust Banksia….Storm Financial….their SOA’s were fine and dandy but alas it was the advice that was crap. Go for it ASIC…show us the path ….. fools