The regulator’s draft SOA for life insurance needs to be restructured in line with the goal of making advice more transparent, YTML has said, suggesting that focus groups with advisers would have shown ASIC the importance of communicating the value of advice above remuneration.
In a statement today, YTML said customer take up of life insurance advice could be adversely affected if ASIC’s example SoA for risk products becomes the norm.
According to YTML, ASIC’s SOA does not prioritise the information consumers are most looking for – the advice – and focuses instead on commissions.
“We believe the disclosure of commissions is overplayed in its current position in the SOA. This represents too much focus on remuneration,” the statement said.
YTML has called on ASIC to change the positioning of commission disclosure and to have the document lead with the advice instead.
“YTML has suggested focus groups with quality financial advisers would have shown ASIC the importance of communicating the value of advice followed by remuneration,” the statement said.
The Life Insurance Framework (LIF) and best interests obligations are designed to improve the perceptions of the financial planning industry and provide consumers with greater transparency and disclosure, YTML said.
“That is why it is important to prioritise the message of value of advice followed by remuneration. So, as an industry we focus on the difference advice makes and not price the service in the SOA before the value is communicated,” the statement said.
YTML has suggested that the payment disclosure is moved from page one to page three under 'summary of recommendations'.
“This would still ensure disclosure is sufficiently prominent but is also provided with context to the value this cost brings to the customer,” the statement said.
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