{"id":37846,"date":"2017-08-01T18:00:17","date_gmt":"2017-08-01T08:00:17","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=37846"},"modified":"2017-08-02T07:43:48","modified_gmt":"2017-08-01T21:43:48","slug":"commissions-at-start-of-soa-lack-context-claims-afa","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2017\/08\/01\/commissions-at-start-of-soa-lack-context-claims-afa\/","title":{"rendered":"Leave SoA Commission Details Alone – AFA"},"content":{"rendered":"

The AFA has recommended that life insurance commissions should not be displayed at the start of Statements of Advice (SoA) stating that to do so would present them out of context to the advice being provided.<\/p>\n

\"AFA<\/a>
AFA General Manager, Policy and Professionalism, Phil Anderson<\/figcaption><\/figure>\n

The Association made the recommendation in a submission to ASIC following the latter\u2019s release of a new sample SoA for life insurance in late May (see: ASIC Releases New Sample SoA for Life Insurance<\/a>).<\/p>\n

The submission, authored by AFA General Manager Policy and Professionalism, Phil Anderson, stated that presenting a statement of commissions before presenting the product advice was not beneficial to the client\u2019s understanding of that advice, and the purpose of the SoA was to set out the need for insurance and make recommendations.<\/p>\n

\u201cIn terms of being upfront and prominent, we do not believe that this means that the commissions should be disclosed on page 1. Commissions will be clearly explained when the financial adviser presents the advice and are also clearly set out in the Statement of Advice,\u201d Anderson wrote in the submission.<\/p>\n

\u201cTypically commissions are disclosed in the SoA just prior to the point where the client needs to confirm their agreement to proceed with the advice. Advisers will also brief the client on the remuneration as part of the verbal delivery of the advice,\u201d he added.<\/p>\n

Anderson said the AFA supported clear disclosure of remuneration and informed consent but believed there was no benefit in disclosing commissions prior to the inclusion of the recommendations, and noted that a requirement to do so would be unique among life insurance SoAs.<\/p>\n

“…there has been no call to include advice fees for superannuation and investment advice at the front of the SoA…”<\/h6>\n

\u201cWe also make the point that there has been no call to include advice fees for superannuation and investment advice at the front of the SoA and that there should not be one style of SoA for insurance advice and another for superannuation or investment advice,\u201d Anderson said.<\/p>\n

The AFA also expressed concern over the level of repetition used in the sample SoA produced by ASIC claiming it increased the length of the document and appeared to overlook the verbal advice that would be provided by an adviser to a client.<\/p>\n

The submission stated that ASIC had appeared to conclude on the basis of behavioural research that repetition in a SoA would produce a better outcome for clients. To this, the AFA added that a SoA was not the advice but a record of the advice that had typically been delivered verbally by an financial adviser in a face to face setting.<\/p>\n

\u201cWe 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,\u201d Anderson wrote in the submission.<\/p>\n

\u201cThe research may have suggested a different outcome if the client had first received the advice directly from a financial adviser. In that case duplication would not be necessary and each section would not need to make sense by itself,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"

The AFA has recommended that life insurance commissions should not be displayed at the start of Statements of Advice (SoA) stating that to do so would present them out of context to the advice being provided.<\/p>\n","protected":false},"author":3,"featured_media":37866,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,4,270],"tags":[4247],"class_list":{"0":"post-37846","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-compliance-regulation","8":"category-products","9":"category-remuneration","10":"tag-feature"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/37846","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=37846"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/37846\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/37866"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=37846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=37846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=37846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}