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17-163MR ASIC consults on new example Statement of Advice for life insurance
ASIC has today released a consultation paper on a new example Statement of Advice (SOA) for life insurance. Consultation Paper 284 Example Statement of Advice for life insurance: Update to RG 90 (CP 284) seeks feedback on the new example SOA and related updates to the guidance in Regulatory Guide 90 Example Statement of Advice: Scaled advice for a new client (RG 90).
The development of the new example SOA follows a number of policy developments in the retail life insurance sector which have highlighted the need for better SOAs.
As part of the life insurance advice reform package announced in November 2015 by the Hon Kelly O'Dwyer, Minister for Revenue and Financial Services, ASIC was tasked with a review of life insurance SOAs. ASIC was asked to consider how to make SOAs simpler and more effective for consumers, as well as how to assist advisers to make better use of SOAs. ASIC was also asked to consider prominent upfront disclosure of commissions in SOAs. CP 284 forms part of this review.
The new example SOA has been developed in keeping with ASIC's increasing use of behavioural research in order to understand regulatory problems. The design of the example SOA has been informed by behavioural research into how people find and understand the information in SOAs. It illustrates how an adviser can produce a compliant SOA that is concise, structured in a way that is easy to follow and written in simple, plain English.
'ASIC has consistently emphasised that the purpose of an SOA is to communicate to the client important and relevant information about the advice they receive. We welcome feedback that will help advisers achieve this objective. The SOA should not be designed as a mechanism to protect advisers against liability or a compliance tool,' said ASIC Deputy Chairman, Peter Kell.
The new example SOA will replace the current example SOA in RG 90
The closing date for submissions on CP 284 is 31 July 2017.