Consultation Paper (CP) 284 Example Statement of Advice for life insurance: Update to RG 90 outlines ASIC’s proposed updates to Regulatory Guide 90 Example Statement of Advice: Scaled advice for a new client.
RG 90 applies to scaled advice, which is “personal advice that is limited in scope”.
ASIC began development of the new example statement of advice (SOA) as a result of several policy developments in the retail life insurance industry that indicated a need for better SOAs.
CP 284 also comes in the wake of a review of life insurance SOAs that ASIC was tasked with in 2015 by the Minister for Revenue and Financial Services Kelly O’Dwyer.
The review was announced by Ms O’Dwyer in November 2015 as part of a life insurance advice reform package, and was designed to investigate:
- How to make statements of advice simpler and more effective for consumers
- How to assist advisers to make better use of SOAs
According to ASIC, 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,” said ASIC.
“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 Deputy Chairman Peter Kell stressed the importance of SOAs for consumers, saying, “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,” Mr Kell added.
“The SOA should not be designed as a mechanism to protect advisers against liability or a compliance tool.”
The closing date for submissions on CP 284 is 31 July 2017.