Ahead of the Quality of Advice Review (QAR) set to be released in December, ClearView has called for three key areas to be addressed in its 2022 reform agenda: “Slashing advice paperwork, no further changes to risk commissions, and measures to support stable, sustainable income protection solutions”.
ClearView managing director Simon Swanson has backed calls for a “slimmed down” record of advice to replace the statement of advice (SoA), particularly in cases where simple advice is being delivered.
The group’s reform agenda cited research that the cost of an SoA has increased by over 30 per cent in the last four years.
“The devastating impact of COVID-19 and a spate of natural disasters, including the recent floods in NSW and Queensland, have heightened awareness of the importance and value of professional advice,” Mr Swanson said.
“However, this trend is occurring at a time when the cost of operating an advice business is significantly increasing and, in turn, pushing advice fees higher.
“It is important that our regulatory system is fit for purpose and does not add unnecessary complexity.”
On a recent episode of the ifa Show podcast, founder and CEO of WOW Women’s Group Tracey Sofra slammed the SoA process as “horrendous”.
“I feel like the client’s in the corner and everyone’s huddled up worrying about all the stuff. If I could just say this, when I present a plan to a client, they don’t really care about the SoA. They just care about what I’ve got to say.”
ClearView also supported APRA’s recent move to defer five-year contract terms for income protection products for at least another two years, with Mr Swanson saying it’s crucial for life insurance solutions to be stable and simpler for consumers.
“ClearView welcomes the revised approach and we support APRA’s ongoing sustainability work,” he said.
“We recognise the importance of engaging with Treasury on issues about product rationalisation and quality of advice, and strongly advocate for engagement with financial adviser bodies, licensees and advisers.”
We can all trust Clearview to look after us.
Advice documents I see follow a format of summarising the advice with minimal detail, then repeating but with more detail, then repeating again with full detail. And then fact / concept sheets are including however theses concepts have already been covered in the soa. An easy fix is to strip out the repetition.
The life insurance industry is broken. There is some irony in that the life insurers and main industry associations supported most of the changes which has decimated their sales.
They just couldnt see that far ahead, could they. And, they ignored the advisers warning that it would happen.
True, true, true ex-Liberal. Two perfect examples of that: 1) [b]slashing commissions to 60/20[/b] – [i]life companies did NOT support advisers against this,[/i] and 2) [b]2 year responsibility period[/b] – again, [i]life companies did NOT support advisers and fight this.[/i]
Yes, life companies now have that for which they wished . . . along with decimated sales and a plummeting distribution channel as GOOD, committed and experienced advisers are forced to into retiring every day. Add in the irrelevant & inappropriate FARCE-IA so-called exam and an[b] inappropriate-for-risk-writers[/b] educational regime due 2026 and you get the picture more clearly.
Oh, forgot to mention – life companies NOT supporting advisers in the fight against this ridiculous compliance regime which is only just NOW being seen for what it is – a bureaucratic nightmare created by bureaucrats and dealerships to cover their arses and justify their existence. Witness the reversal of the safe harbour regulations. Sickening what these overpaid glorified public servants are allowed to get away with!
The trouble is a ROA can look very much like a SOA because the compliance boffins have got hold of the templates. The ‘significant changes’ for a clients circumstances also dictate you can use a ROA (for some reason). Even if a clients circumstances change you should be able to use an ROA (or something short) because the adviser already knows the client and their circumstance. Quite often significant changes in circumstance do not require a change in financial strategy too, yet according to ASIC you need to do a SOA.
The key red tape that needs getting rid of Hayne2 Annual Fee Renewals. Corps Act 962A(3) permits a fixed dollar fee for a fixed term BEYOND 12 months. Because it is a fixed term, it is NOT an ongoing fee. Treasury should recognise the law & advise the super funds to permit this accordingly. Until this is fixed, nothing will improve.
Plus blanket exemption of retail financial advice from the DDO obligations, total rework of fee disclosure obligations to make them principal based not prescriptive in format, increase in risk commissions to 100%/20% to provide genuine choice for those who need it most, intra-fund advice paperwork exemptions to also apply to licensed advisers as well as super fund staff when providing intra-fund advice, tax deducibility for non-vertically or horizontally integrated advice and we may be starting to get somewhere in consumer’s interests….. Then review AFCA and keep it to small disputes awarding up to $100K only and have complainants not accepting early stage rulings against them up for 50% of the costs to proceed further. Larger claims belong in a court of law where they can be properly tested. Also have AFCA bound to follow its own precedents. This will lower PI insurance premiums and excesses and reduce compliance demanded by nervous licensees.
James this sounds way to sensible and practical to be seriously considered from policy makers
Not sure I’ve read a better informed comment ever. Well done James.
It isn’t rocket science is it ? Go figure.
Copy, paste & forward to Michelle Levy at the Quality of Advice review. Don’t be scared off by the long-winded document she released. We need sensible suggestions like this to be put forward. I have grave doubts that a lawyer from the product side will do anything positive for us. But you never know.
Mostly agree James but there is a much simpler solution to the AFCA problem. Remove AFCA from financial advice altogether. Only a tiny percentage of AFCA complaints relate to advice. AFCA should be for complaints about product providers only. Financial advice is supposed to have a “single disciplinary body” now anyway.
James, please run for parliament. Our industry needs proper representation in office. We can’t rely on party hacks, lawyers, union minions and fish-and-chip shop owners.
And allow advisers access to clients information through MyGov. We will get banned if we don’t use the right information but the Government puts roadblocks up.
Have all super funds included in the Consumer Data Right regulations to make them make the information available.