Further calls have been made to move commissions off the front page of ASIC’s example Life Insurance Statement of Advice (SoA) with the FPA stating the document should highlight the advice process first.
In its submission to ASIC in response to the example SoA provided in Consultation Paper CP 284, the FPA said it was not appropriate for the SoA to begin with fees and remuneration disclosures, according to FPA Head of Policy and Government Relations, Ben Marshan.
“While a SoA is a disclosure document and not the client’s financial plan, it should still be aspirational. It should help demonstrate the professional diagnosis process a professional financial planner undertakes, and how it will help the client achieve a better financial position through an implemented financial plan,” Marshan said.
“While a SoA is a disclosure document…it should help demonstrate the professional diagnosis process a professional financial planner undertakes…”
He added the FPA supported the development of a new example SoA template through consultation with the financial advice sector and the current version was an improvement on previous SoAs produced by ASIC.
The comments from the FPA follow news that the AFA has called for the removal of commissions from page one of the example SoA stating it presented the numbers out of context and was inconsistent with other type of SoAs (see: Leave SoA Commission Details Alone – AFA).
The view of both associations have also found support with financial services technology provider YTML which stated the example SoA downplays the importance of advice.
In its submission to ASIC, YTML General Manager Advice Delivery, Terri Ho said the advice consumers would be looking for in an SoA was not being prioritised and any commission numbers should be pushed back into the document.
“We believe the disclosure of commissions is over played in its current position in the SoA. This represents too much focus on remuneration,” Ho said.
Ho also said that YTML suggested to ASIC that focus groups that contained advisers would have shown the regulator the importance of explaining the role of advice before detailing the remuneration, which should appear on page three under the Summary of Recommendations.
“This would still ensure disclosure is sufficiently prominent but is also provided with context to the value this cost brings to the customer,” Ho said.