Advisers struggling to keep up with compliance might soon benefit from a new panel, which will reduce compliance demands by altering SOAs and oversee their use by businesses.
This is the resolution being proposed by the AIOFP, who has been discussing the issue at its Adelaide, Singapore and Siem Reap conferences. According to AIOFP executive director Peter Johnston, current compliance culture in the industry is “too cumbersome, expensive and over complicated”. Johnston says “monstrous” statements of advice are confusing clients, costing too much and drowning advisers in paperwork.
Under the proposed structure, compliance expert Frank Smith will partner with the AIOFP and manage a panel of 15-20 compliance professionals from all states. They will work on reducing the size of SOAs, and will go to businesses on a needs-basis to show them how to build an SOA that is appropriate to the clients’ needs, says Johnston
The association have verbally run the idea past ASIC and Johnston says the regulator wants smaller SOAs. “We had Kate Metz get up at our conference, saying that they believe SOAs should be between two and eight pages…the whole process has been totally high-jacked by the legal community, working on that very flawed situation of hourly rates; which means the more time you’re taking, the more money they make.”
The smaller SOAs will also protect advisers in court, because it is illegal for an adviser to provide a confusing document to the client, says Johnston.
“Compliance is everyone’s ‘Achilles heel’, it has to be right or you face the real possibility of being ‘named and shamed’ or, worst case scenario, lose your business – which seems to only happen to the independents.”