Criticism of ASIC sample SOA intensifies

In a statement commenting on the FPA’s submission to the consultation process on the draft SOA, FPA head of policy and government relations Ben Marshan said that while the professional association supports ASIC’s aim to develop a new example SOA template, further amendments are required.

While the FPA supports efforts to increase fee disclosure to consumers, Mr Marshan questioned the current placement of this information within ASIC’s draft.

“We do not think it is appropriate for the SOA to begin with fees and remuneration disclosures,” Mr Marshan said. “While an SOA is a disclosure document and not the client’s financial plan, it should still be aspirational.”

The FPA’s submission also argues for the inclusion of icons, symbols, graphics, audio and video to create a more engaging information delivery process for consumers.

“As smartphone and tablet use make up 63 per cent of total time spent on devices in Australia, ASIC should further consider how it can encourage the digital delivery of advice using mobile technology,” Mr Marshan said.

The AFA has also taken issue with elements of the example SOA, including similar criticism of the early placement of remuneration disclosures.

“We do not believe that the design of SOAs is improved by the inclusion of commissions on page one of the SOA,” the AFA said in its submission to Treasury.

“There is no benefit in disclosing the commission's prior to the inclusion of the recommendations. At that stage they have no context.”

The AFA also explained that modification of SOAs can be a costly exercise for licensees or practices and that the regulator should factor this in.

While both associations stopped short of describing the example SOA as “rubbish”, as Nick Topham of Clique Paraplanning recently did, the submissions indicate a level of unity among the financial advice profession in arguing for reform of the current SOA template.