ASIC Defends SoA Disclosure

ASIC has defended its placement of advice fees at the front of the sample life insurance Statement of Advice (SoA) telling a Parliamentary Joint Committee that it was a response to a request from Government.

Federal member for the Queensland seat of Forde, and PJC Member, Bert Van Manen

Federal Member for the Queensland seat of Forde, and PJC Member, Bert Van Manen

The regulator added a final decision on the matter had not been made and that it was considering similar forms of disclosure for life insurers and other product providers.

The comments were made as part of a recent hearing of the Parliamentary Joint Committee into the Oversight of ASIC in response to a question from Committee member Bert Van Manen, MP.

In his question, Van Manen asked why the example SoA recommended upfront disclosure of fees and commission while other ASIC guidance to product providers did not require the same placement and breakdown of fees and charges.

In response, ASIC Senior Executive Leader, Financial Advisers Louise Macaulay said, “This particular exercise around the sample SOA is not a template by any stretch; it’s a sample SOA. It was directly in response to a request from the government as part of broader life insurance reforms. And the Minister specifically said prominent up-front statements about commissions, and we acted on that and did that.”

“It was directly in response to a request from the government as part of broader life insurance reforms…”

Van Manen said he was concerned with the inconsistency of application of disclosure requirements for advisers compared to product providers and that “…my concern in this whole space is that advisers have been the easy target and have paid an enormous price for that, yet the product providers and other manufacturers upstream have got off scot-free for a lot of their failures and inefficiencies”.

Responding to this, ASIC Deputy Chair, Peter Kell said the regulator was a strong supporter for greater disclosure across the board and it would work towards this being implemented for product and advice providers.

“We are strong supporters of the government’s initiative to introduce the design and distribution obligation arising out of David Murray’s inquiry, which… rebalances accountability so that it’s not just on the adviser but there’s accountability more squarely put on the product manufacturer, the designer, as well,” Kell said.

“I think that reform, which is currently being consulted on and looked at, is very important in that respect, because I think you’re right: the accountability has not been appropriately balanced across the supply side,” Kell added.

  • Jeremy Wright

    Bert has been a great advocate for advisers and should be applauded for his efforts to bring some balance into the argument.

    Unfortunately, the message does not seem to be getting through to the Government and the Regulators who advise the Government, seem to REACT to media stories and directions from incompetent ministers, which pressures them to create UTOPIAN strategies that are based on false information, which has caused the years of mismanagement that this Government and the Labor loonies have foisted upon us all.

    An inexperienced person, no matter what job they do, does not have the ability to make the correct decisions, as they do not have years of practical work in the field, which includes good and bad decisions, which they were able to learn from.

    The reality of current Government policy, is to make it up as they go, which never works.

    All problems are simple to fix, so long as the problem is properly diagnosed, then properly analysed, with proper processes and implementation to remedy the issue.

    Instead, what we have, are rogue operators whose only concern is for them and their shareholders, who understand that the Government is full of naive and indifferent Public servants who find it difficult to get out of bed each morning, which makes these rogues pushing of their own agenda’s simple, as this Government is incapable of putting up a logical argument or response to anything, it seems today.

    I have said it many times.

    Make all public servants and all Australians, accountable for their actions, just as we are, including lobbyists.

    Then and only then, will some honesty and integrity come back into this Country, which will expose the corrupt and outrageous actions of misguided and dangerous people who should not be allowed to push their own agenda at the expense of everyone else.

    • The Patriot

      what you are asking for Jeremey, is so far beyond their acceptance level, sadly. Public servants are not accountable. Its a closed shop based very much on self preservation and ideology. The TV show Yes Minister was more a documentary! Accountability at a government level is limited to voting them out… in our system, we have a choice of idiots or idiots from a policy perspective which leads to apathy in the voting process. IE it doesn’t matter so why put thought into it. As advisers, we must lobby every Minister and our own professional representatives and our own fed MP to be heard. If we all did this, the fear of lost votes would rise and we might get some action. Of course, where our bodies let us down is that they were weak and rolled over in the very beginning and its very hard to reverse a process that was once seen as acceptable to naïve people. Maybe a few advisers need to stand for parliament …. after all, the ones who are leaving our industry need to do something relevant to fill a very relevant void. Most advisers I talk with are community minded … anyone volunteering?

  • NobbyK

    It is understandable that people who have no idea on how to sell something would impose their ignorant views on others. When building a house, you need the plans and quantities before you can place a value on the costs.When buying a car, you find out which car you want and need first before discussing the price. A doctor will diagnose a patient before recommending a course of action and then charging for the consultation.
    Why then do ASIC and incompetents in government think they know better than those who are doing the real work in the community.
    The commission and fees and charges come at the end of the sale.
    UNLESS – someone is charging fee for service in which case they will quote a fee to be paid before any work starts.
    Imagine going in for heart surgery and the doctor asks for the payment upfront!

    • alistsir

      Nobby – lWe as IFA’s are to put our clients first before our own pocket. This is best interest at its finest. Do politicians have the same standard and if not, why ? Ah yes of course….self interest. I get it now….

  • CMY

    I assume Kelly O’Dwyer will be taking questions from the floor in relation to this matter during her attendance at the forthcoming AFA National Conference ??…or will she be bundled off to a “private” meeting as at last year’s conference where she was protected from the real issues and questions from advisers because she doesn’t have the courage or conviction to face them?
    Talk to the media, but don’t talk directly to the people who will be significantly and detrimentally affected by her unacceptable misunderstanding and transparent manipulation of this space.
    Let’s see if the so called Minister for Revenue and Financial Services will actually speak to people who are involved on a daily basis?….right at this point she is under sustained attack from heavy hitters within the Liberal party and from within her own seat of Higgins.
    The talk about O’Dwyer’s lack of performance has been rife over some time now and there are internal moves from influential people to remove the continuing problem.
    Let’s hope those who actually understand how big and small business works will have their way.

    • Squeaky_1

      YES Yes YEs, but remember all the time that she is getting PAID from the trough of taxpayer money!! Regardless of the clearly SH*T and harmful-to-consumers job she is doing, she will get her pay this Friday PLUS a taxpayer funded benefits package PLUS, PLUS, PLUS until she finally is FULL of taxpayer funds and cannot engorge anymore and retires herself on TAXPAYER provided money! Absolute face-smacking insult to all taxpayers from these useless politicians. WHAT QUALIFICATIONS DO THEY HAVE TO MAKE RUINOUS CHANGES TO AN INDUSTRY SO IMPORTANT TO CONSUMER WELL-BEING? Any minister, like HER that either misunderstand woefully the industry that she ruins OR the taxpayers that pay her should, like us advisers (I.E. chargebacks), be made to pay back her ill gotten gains (pay) when shown to be ineffective.

  • Bumused

    I really do t know what to say anymore ,!!! It’s just one miguided step after another with their eyes closed
    Doesn’t anyone of them understand what they are doing
    Talk about self interest only That subway franchise is looking better every week

    • Totally Frustrated Risky

      Its just staggering in it??!!

      This regulator no integrity or professionalism and is very clearly conflicted in its duties. It’s an organisation that’s very purpose is to find (or fabricate) fault to ensure its very existence for God sake so they deliberately ignore the truth when it’s staring them in the face and only focus on what the minority of advisers do.

      There’s not one industry in the world where there’s not a small minority of people in it that have done the wrong thing by the very people they’re meant to serve.

      Through its totally conflicted actions, ASIC is single handedly and systematically destroying this industry and the reputations of many, many advisers who have worked tirelessly for their clients.

      I’m just about done after almost 10 years serving my clients I’m afraid.

      • Squeaky_1

        No, ASIC is not single handedly destroying our industry. Life companies and the associations throw their hats into the ring on occasion too don’t forget. It really is ‘Dad’s Army’ don’t you think? Would be screamingly laughable if it wasn’t for so much client detriment they are causing – not to mention ruining adviser businesses and the promising careers of new recruits.

        • Squeaky_1

          . . . and I’m also about done after 30 years. I had all intentions for 40-45 years but this ASIC and life company idiocy says it is time to call it a day. Too sad truly . . .

          • XYZ

            Would say I am not far off exiting as well. I am 33 and have been in the industry 11 years. It doesn’t seem like its worth it anymore with all this interference from government.

        • Ten Beers

          wow. Im 30 years also and there is no further point to continue. when your ladder is against the wrong wall and you can no longer conduct valued service to your clients, then your climb is no longer valid and its time to hang the hat.

  • Damian Eales

    If you local Member is from the Lib/Nats go and knock on their door and talk to them, don’t just leavr it to Bert

    • Mark

      Its not a template ?/ what does that mean , Why have it ??

  • Paul

    I actually see this as a positive sign. Reading between the lines, Louise Macaulay seems to be saying “This is not really what ASIC wants. We just did what the minister told us to.”

    We all now know that O’Dwyer’s agenda is to make it more difficult for licensed advisers to recommend good quality insurance products that pay claims, so that her FSC friends can push more junk insurance via direct advertising and “affinity programs” instead. A clear anti consumer agenda. But perhaps Macaulay has more backbone and less personal prejudice than her high profile “superiors”. With changes at the top of ASIC coming soon, there is a glimmer of hope that ASIC will start acting more in the real interests of consumers.

    • Totally Frustrated Risky

      Gotta say I’ve never bee so angry, let down and disillusioned by the Liberal Party and what they stand for now AS A DIRECT RESULT OF KELLY O’DWYER.

      What industry any where else in the world has to state their remuneration before they provide the good or service they provide?

      I’ve personally written to this minister and my local MP to inform them both that while her fat head occupies and presides over this portfolio, I will not vote for them – which is the first time in my voting lifetime of 30+ years.

      It’s absolutely clear her aim here is to deliberately sabotage this industry and everything we are trying to do for our clients as advisers.

  • Rob

    Dear client,
    Please find enclosed your Statement of Commission. It is designed to be in your best interest, that is why i have placed at the forefront of this document the commission i will earn. This is very important that you understand that i will earn commission. Please refer to page 39 for the insurance details. That is why you contacted me in the first place i believe!
    Should you wish to allow me to earn commission, please sign the authority to proceed with me earning commission.

    • Totally Frustrated Risky

      How ludicrous is this???!!!!

      Like I just said in another reply Rob – what industry anywhere in the world has to state the remuneration earned before the good or service is provided to the consumer????

      Its deliberate sabotage without doubt.

    • alistsir

      How about politicians having to disclose their complete earnings both direct and indirect. Yes like in the USA. Full disclosure means that all forms of remuneration are disclosed and with pollies, it is via a tax return. Now perhaps they ought be compelled to disclose their proposed remuneration having gained office and their past say, 10 years worth of returns so that we can examine any conflicts of interest. Suppose if they do not achieve much or anything for the public good, we had laws allowing us the voting public to remove them from office by say having a petition of say 100,000 people agree that they had hired a nitwit. That way our country would have firm leadership for the benefit of all and not political ideology favoring a few. Our industry and consumers have suffered for the last 30 years with lousy leadership. The proof is everywhere. A car industry and manufacturing industry that is either no more or on its last legs. Technology abounds but no leadership means we do not have an energy policy to keep our business and industry safe from power shortages. An education system which now places Australia 17th out of 25 nations, when we use to be in the top 10. Our pensioners having cuts after decades of toil and doing the right thing while pensioners oversees have a guaranteed retirement pension regardless of assets and income. Just ask anyone from NZ, Europe or the USA, SIngapore. Yes the economic fools in government of both persuasions have done a lousy job and have given us nothing but arrogance and contempt. Oh and our associations simply have watched all of this play out with not much murmur. Australia used to be a land of plenty and thanks to the fools we have in positions of leadership….now it is reduced to questionable times. What do we say as a nation to future generations? Why did we not speak up? Why did we let this happen? What do we do now? Start rehearsing the answers to these questions as our kids ask us for a please explain.

  • CMY

    Kelly O’Dwyer is manifestly negligent in her ability and responsibility to manage this process….she is a puppet and it is very obvious who is pulling the strings.
    The Liberal Government’s support of small business in the Financial Services space has been nothing short of appalling….this Liberal Govt is crucifying IFA’s and the eventual outcome will be the consumer accessing over priced, direct insurance products, full of pre-existing condition clauses sold over the phone under the guise of general advice.
    It will be then, the Lawyers will be clapping because the number of claims disputes will skyrocket and the reputational damage that will be delivered to the Life Insurance space will not be recoverable.
    The ridiculous outcome of all this mess, will be a further under-insured public who will then turn to the Govt for financial support rather than relying on quality advised insurance products to reduce their debts, pay the medical expenses and provide themselves,their family or their estate with financial dignity, thereby taking the responsibility away from the taxpayer to fund their existence.

    • Totally Frustrated Risky

      Spot on CMY – so why are we the only ones that can see this outcome??!!