ASIC may not know best on SOAs says AFA
There are plenty of statements of advice (SOAs) being used by financial advisers which are better and more effective than the sample form being pursued by the Australian Securities and Investments Commission (ASIC), according to the Association of Financial Advisers (AFA).
In a submission responding to ASIC’s release of a sample SOA, the AFA said that while it supported the objective of improving the readability of SOAs, it did not believe it should be mandatorily followed by financial advisers.
“Generating succinct SOAs in an efficient manner that are clear and concise is the obvious objective,” the submission said. “It needs to be noted that clients also need to read often lengthy Product Disclosure Statements (PDSs) along with other documents such as Financial Service Guides and Fact Find forms. We further note that this is simply an example SoA and that it is not mandatory.”
The AFA said this was an important consideration “as there are many businesses that already have very effective SOAs that have been consumer tested in the real world and where changing will deliver no benefit, but result in significant cost”.
“It is important that the financial advice sector treats this example SOA as a guide and chooses to pick from it what will improve their SOAs and not just to decide that it would be risk averse to simply replicate it,” the submission said, adding: “We are concerned that this may be misunderstood”.
Elsewhere in its submission, the AFA has questioned ASIC’s use of behavioural economics in the design of SOAs, suggesting that such an approach and the use of repetition failed to take account of the fact that clients would have already received advice from an adviser before receiving the SOA.
“We therefore do not support the inclusion of any repetition in the SoA and highlight that the SoA is not how advice is delivered, but rather a reference point for the purpose of review of the advice received,” the AFA submission said. “We suspect that the decision to include repetition may have been on the basis of consumer testing where the advice was not presented first in a verbal manner by a financial adviser.”
Recommended for you
Advisers at DOD Bookkeeping, which received an $11 million penalty last week, received as much as 40 per cent of their remuneration via a bonus when clients purchased a property via a SMSF, according to court documents.
Private wealth manager Escala Partners has launched an end-to-end investment platform to strengthen its alternatives capability as clients seek sophisticated vehicles.
Perpetual Wealth Management has hired two advisers from Ord Minnett as part of five hires, just weeks after the rival firm announced it had picked up six from Perpetual Private.
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.
