SoA myths debunked

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Despite scare-mongering by some compliance experts and lawyers, the best interest duty will not be the downfall of the concise SOA.

AIOFP compliance specialist Frank Smith has sent a matter-of-fact email to members of the association to put their minds at ease. Smith says that the financial services compliance industry and “certain segments of the legal fraternity”, are trying to burden advisers with another layer of unnecessary “compliance”.

“This time the best interests duty is being used as the excuse with statements in the press made that this will make Statements of Advice even longer than many of the encyclopaedias we already have today,” says Smith.

Under the Corporations Act, there has been no change to SOA requirements as a result of FoFA, he says. So the SOA still has to be presented in a clear, concise and effective manner, and the level of detail included remains unchanged:

  • A statement setting out the advice
  • Information about the basis on which the advice was/is given
  • Name and contact details of the provider
  • Disclosure of any remuneration or benefit that might have influence over the advice

“It’s worth remembering that the SoA, while being a written record of the advice, is rarely the advice itself because in almost every case this has already been given verbally in meetings with the client,” says Smith. “In any dispute it is the client’s recollections of what took place in these meetings that is the focus of the arbiter in resolving the dispute.

“Recent press announcements indicate that financial planners will continue to represent the profession most vulnerable to litigation. In other words the feeding frenzy of law firms is set to continue while professional indemnity insurance is still viewed as a consumer protection measure rather than a risk management tool.”

  • GAB on 14/10/2013 10:15:48 AM

    Like Fred, why bother doing an SOA...why don't we just write big file notes and make the SOA a fee disclosure document (SOF) which is pretty much what it is now.

    The SOA makes jobs for IT and legal benefit to anyone else.

  • Fred Smith on 11/10/2013 10:24:05 AM

    “In any dispute it is the client’s recollections of what took place in these meetings that is the focus of the arbiter in resolving the dispute."

    What is the point of the SOA then?

  • Martin Ball on 11/10/2013 10:17:39 AM

    Perhaps in a perfect world. Unfortunately since FOFA many dealership SOA templates are now more repetitive, less concise and clear and are up to 10 pages longer or more. Evolution in this industry is far from heading in the right direction. Nothing we write in the finance industry is clear to the poor consumer.

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