Advisers secure win on SOA commission disclosure
The Australian Securities and Investments Commission accepts commission payments should not feature on the first page of new life insurance statements of advice (SOA).
In consumer testing, the regulator found participants want this information on the first page, but submissions from the industry argue this will distract from the advice given.
“The main arguments against this mode of disclosure were it placed too much focus on adviser remuneration, rather than on the client’s needs,” the regulator says.
“And it communicated information about commissions out of context.”
In the new 23-page statements, commissions now appear in an executive summary towards the front. The detailed report on commissions remains at the back.
“Prominent, upfront disclosure does not necessarily mean commissions need to appear on the front page,” the regulator says.
“While front-page disclosure ensures clients will notice the information, it may not lead them to understand it in the context of the advice or to critically engage with the advice itself.”
Regulatory Guideline 90 says the SOA is about providing important information clients have received from their advisers.
“The example SOA in RG90 is designed to assist advisers to produce an SOA that is compliant, concise, easy to understand and written in plain English.”