{"id":59431,"date":"2022-02-07T09:25:09","date_gmt":"2022-02-06T22:25:09","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=59431"},"modified":"2025-03-14T12:02:27","modified_gmt":"2025-03-14T01:02:27","slug":"letters-of-advice-dont-address-the-real-problem-synchron","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2022\/02\/07\/letters-of-advice-dont-address-the-real-problem-synchron\/","title":{"rendered":"Letters of Advice Don’t Address the Real Problem – Synchron"},"content":{"rendered":"
\n
\n

One of the key issues for advisers in the last week has been the spotlight being shone on the need to do something about the complexities associated with SoAs. Neatly encapsulating the issue is one adviser reflecting that given clients cannot understand most of what is written in an SoA and don’t read them, this is a pretty good indication that the system needs simplifying…<\/h3>\n<\/div>\n<\/div>\n

Recent calls to replace Statements of Advice with Letters of Advice don’t address the underlying cause of the problem, according to Synchron.<\/p>\n

The firm\u2019s new General Manager \u2013 Compliance, Phil Osborne<\/strong>, says calls by some industry commentators to move to a \u2018Letter of Advice\u2019 are “…simply playing with semantics,” as he notes that the Corporations Act already requires advisers to have an SoA that is ‘…worded and presented in a clear, concise and effective manner.’<\/p>\n

He says that discussions around what to call the advice document \u201c\u2026don\u2018t actually address the core issue \u2013 which is the unnecessary length and complexity of Statements of Advice. Calls for a \u2018Letter of Advice\u2019, while highlighting the issue, is looking in the wrong place for the cause of the problem.\u201d<\/p>\n

\"\"<\/a>
Phil Osborne…we can act today and choose to follow what the Corporations Act already requires us to do…<\/figcaption><\/figure>\n

Osborne says that Synchron believes the solution is far simpler than a name change.<\/p>\n

He says the industry can either take years going through the process to discuss and legislate and change the name of the document, \u201c\u2026or we can act today and choose to follow what the Corporations Act already requires us to do, and that is to have an SoA that is, \u2018worded and presented in a clear, concise and effective manner\u2019.\u201d<\/p>\n

Osborne referenced section 947B\/C(6) of the Corporations Act, the section that directs that a Statement of Advice must (not \u201ccould\u201d or \u201cmight\u201d) be clear, concise and effective; something that Synchron sees as being generally ignored by industry compliance regimes.<\/p>\n

…Section 947B\/C(6) is as much a legal requirement as the need to act in the client\u2019s best interests…<\/p><\/blockquote>\n

\u201cSection 947B\/C(6) is as much a legal requirement as the need to act in the client\u2019s best interests (section 961B) or to provide additional information in the event of recommending a change of financial product (section 947D),\u201d he says.<\/p>\n

\u201cYet for some reason, compliance regimes don\u2019t seem to recognise this, instead requiring more and more to be included in the SoA \u2013 not for the benefit of the client, but for the sake of so-called \u2018best practice\u2019.\u201d<\/p>\n

The statement adds that Osborne sees a big part of his role at Synchron as recognising where the advice documentation in place doesn\u2019t meet this obligation, and to develop versions that will both meet the letter and spirit of the legislation, while creating a better experience for both advisers and their clients.<\/p>\n

He argues that what seems to have been forgotten is that best practice is about what\u2019s best for everybody. \u201cWe need to consider what is best for the client and best for the adviser,\u201d he says. \u201cA purpose that a shorter document would definitely serve.\u201d<\/p>\n

Don’t Blame the Disclosure Regime<\/strong><\/p>\n

He adds that blaming the disclosure regime also misses the mark. \u201cRegulatory Guide 175 is clear when talking about disclosure and the need to be clear, concise and effective, directly in keeping with its counterpart in the legislation,\u201d he says.<\/p>\n

\u201cWhile everyone is very quick to point fingers at legislation and the regulator, that isn\u2019t where the blame lies.”<\/p>\n

He says that the work that ASIC has done recently on advice documents as part of its affordable advice project \u201c\u2026has highlighted that they don\u2019t believe long documents are in the best interests of the client either, regardless of the disclosure regime.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

One of the key issues for advisers in the last week has been the spotlight being shone on the need to do something about the complexities associated with SoAs. Neatly encapsulating the issue is one adviser reflecting that given clients cannot understand most of what is written in an SoA and don’t read them, this […]<\/p>\n","protected":false},"author":24,"featured_media":59436,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,6,8291],"tags":[],"class_list":["post-59431","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-dealer-groups","category-story-of-the-week"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/59431","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\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=59431"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/59431\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/59436"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=59431"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=59431"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=59431"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}