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.”

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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.”




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agree, we spend a lot of time, sometimes multiple meetings, discussing and presenting information, educating and adjusting, before we go to a SOA. To replicate all of that in the SOA is nonsense - summarise it and the process yes, but to repeat it over again and again just shows they don't understand the true process of advice, and the time that goes in before an SOA is prepared.

ASIC really have no idea. To think the client's first look at the advice is via the SOA shows how far off the pace they are. What hope does our industry have with this standard of governance. They're not even trying to understand the adviser client relationship. We may as well become not for profits like their favoured market segment currently spending member funds to throw mud at banks.

If any respectable dealer group doesn't have a better SoA than ASIC's example they don't deserve to be around.
The ASIC version other than having more disclosure of costs than any other examples I have seen does not meet ASIC's own requirements to be clear and concise. To think mwe are all going to have to pay $965 per adviser per annum to receive this rubbish.

So now we have an ASIC SOA, an FPA SOA, and a Licensee SOA. So many experts. Which one of these is actually spending significant time face-to-face with clients, or at least consulting with those of us who do?

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