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Will my compliance team come on board?
The SOA compliance spectrum also needs to be considered. At one end, statements of advice need to be easy for consumers to understand, at the other end the legal jargon designed to protect licensees and planners from litigation, need to find an intermediate balance.
Over-compliance is not aligned with regulation. Over-compliance is designed to protect the licensee or planner from the clients’ rights. While regulators do not agree with this approach, compliance teams are trying to find a balance between over-compliance and being vulnerable to litigation, should the SOA not be comprehensive enough to cover all bases.
At a bare minimum, any future visual and digital SOA should start with core legal requirements; what must be included and covered. The opportunity here is to make the language engaging and memorable to the consumer. Core legal requirements should not be seen as a threat to clients, but rather a layer of protection for both planners and clients.
Digital advice can enhance compliance as well as consumer understanding. Most client complaints can be traced back to a “misunderstanding” of the advice. Hence, the focus on client understanding over disclosure is a key element of a digital SOA.
The best way to be more compliant from a litigation perspective, is by making clients take ownership of the decisions made, ensuring that they fully understand the strategies, products, risks and rewards prior to any implementation. This can be easily achieved through a digital process that not only helps clients understand advice, but also records the multiple interactions between the planner and client throughout the advice process.
Finding the right balance between a clear, concise and effective SOA document that clients own and understand is fundamental. This process should be based on a sound understanding of the risks and rewards that lead to fewer “misunderstanding-based” complaints and more compliant advice.
Combined with digital advice suitability parameters, rules within advice modelling software, digital supervision, instant vetting and data, can assist in proving the advice is in the best interests of every client. Resulting in downward pressure on compliance costs; including professional indemnity insurance.
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