Parliamentarian calls 100-page SOA ‘absurd’

A parliamentarian has called the outcome of a 100-page statement of advice (SOA) after 26 hours of financial planning work to onboard a client as “absurd”.

In questioning the Financial Planning Association of Australia (FPA) during a parliamentary committee hearing, Liberal backbencher, Jason Falinski, asked what the result was after 26 hours of client meetings, data collection, investment strategies, and research.

FPA head of policy, strategy, and innovation, Ben Marshan, said the outcome was “a large, large, brick of paper”.

“The reality of what’s in the Corporations Act which is what is required around providing financial advice there is not actually a lot in there. ASIC [the Australian Securities and Investments Commission] has provided in the past sample SOAs that cover off what the legal requirements are which are as short as eight to 12 pages,” Marshan said.

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“What’s not covered in those SOAs is the fact that we’re regulated by eight different regulators. We have numerous complaints and disciplinary systems and processes that financial planners need to comply with.

“The only way a financial planner and their licensee can be comfortable to have a defensive position if there is a consumer complaint against them is to document something that is around 100 pages long to make ensure that every warning, consideration, recommendation is documented in such a way that if someone picks up that document, they can find a defines for whatever the complaint is.”

Falinski replied with: “You’re telling me that 92 pages out of 100 pages are just to satisfy lawyers?”

“Does that not strike you as not only absurd?” Falinski said.

During the hearing FPA chief executive, Dante De Gori, noted that the ASIC levy was not equitable or sustainable and would cost the industry.

“In any industry, if a cost or a fee was to increase by 340 per cent over four years that industry would be unsustainable,” De Gori said, and said the levy ranked highly in the concerns of financial planners and that the costs were ultimately passed on to the individual financial planner.

“We don’t believe the way the formula is calculated and the way it is dispersed is equitable and fair,” he said.

“We want that [the levy] to be reviewed. There are activities that we're aware ASIC undertakes that have nothing to do with financial planners, yet they are placing that cost on financial planners through his levy.”