‘Letters of advice? Let’s drop the semantics’: Synchron

After only starting at the dealer group this week as its new general manager – compliance, Phil Osborne has taken aim at calls within the industry to make the switch.

“Discussions around what to call the advice document don’t actually address the core issue – which is the unnecessary length and complexity of statements of advice,” Mr Osborne said.

“Calls for a ‘letter of advice’, while highlighting the issue, is looking in the wrong place for the cause of the problem.”

Mr Osborne has argued that the advice sector shouldn’t bother taking years to go through the process to make the change and instead follow the Corporations Act that states that a statement of advice must (not “could” or “might”) be clear, concise and effective.

“Section 947B/C(6) is as much a legal requirement as the need to act in the client’s best interests (section 961B) or to provide additional information in the event of recommending a change of financial product (section 947D),” he said.

“Yet for some reason, compliance regimes don’t seem to recognise this, instead requiring more and more to be included in the SOA – not for the benefit of the client, but for the sake of so-called ‘best practice.’

“We need to consider what is best for the client and best for the adviser.

“A purpose that a shorter document would definitely serve.”

The Financial Services Council (FSC) was one of the groups that called for the change in a white paper released last year that proposed a new framework that could reduce the cost of advice by almost 40 per cent (near $2,000).

Recommendations included removing “complex” SoAs in favour of a letter of advice, as well as abolishing the safe harbour steps for complying with the best interests duty.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.