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AFA flags concerns on draft SOA

The Association of Financial Advisers (AFA) says a statement of advice (SOA) is not the primary means of delivering advice on life insurance.

In a submission to the Australian Securities and Investments Commission (ASIC), it says a draft SOA in a consultation document from the regulator seems to be promoted as a source of advice. The SOA should be a record of the advice, and a reference point for further consideration and discussion with the adviser, the AFA says.

The association also questions the need for a new document template when there are plenty of SOA templates that work.

“We note this is simply an example SOA and that it is not mandatory,” the submission says.

“This is an important consideration because there are many businesses that already have very effective SOAs that have been consumer-tested in the real world and where changing will deliver no benefit, but result in significant cost.”

The AFA argues ASIC’s sample SOA should be treated as a guide to improve current documents.

It also has issues with repetition in the draft SOA.

“It appears ASIC has concluded on the basis of behavioural research that repetition in the SOA delivers a better outcome for clients,” the AFA submission says.

“It is our view the SOA is not the advice, but rather a record of the advice. The SOA is primarily a document that supports and reinforces the advice in the vast majority of cases.”

However, the AFA welcomes the removal of jargon from SOAs and greater use of plain English. “The style of wording is consumer-friendly in large part.”

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