SOA failure a slant on legislation
The Financial Planning Association (FPA) is confident the industry will overcome conditions that led to a ‘statements of advice’ failure in the Australian Securities and Investment Commission’s (ASIC) 2006 ‘shadow shopper’ survey on superannuation advice.
In 46 per cent (132 of 284 surveyed cases) across a “wide range of advice situations”, ASIC’s shadow shoppers did not receive a statement of advice (SOA) in compliance with the Financial Services Reform Act (FSRA).
In a third of these cases, money was switched between funds, but ASIC did not stipulate how many of these switches were merely to consolidate disparate super funds.
The FPA is putting its faith in a consultation paper released by the Parliamentary Secretary to the Treasurer, Chris Pearce, which has called for industry feedback on its second tranche of refinements to the FSRA.
FPA policy manager John Anning is “optimistic” Pearce’s paper, released the day after the shadow shopper report, will result in most of the underlying conditions for non-compliance in the survey being redressed.
“We are saying that if, as seems likely, these conditions are addressed as a result of the Pearce paper on FSR refinements, then 83 per cent of the 132 specified cases of non-compliance revealed in the survey would fall away.”
Anning said that a “clear practical distinction between personal advice versus general or product advice would be required” for this outcome to be achieved.
“We have consistently raised with ASIC the difficulty of providing cost effective advice given the prescription that is required by the FSRA, and also the lack of a clear and practical distinction between general and personal advice.”
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