Taking forever to create an SOA

Timeliness is next to Godliness. It is imperative that SOAs are provided to clients at the earliest possible opportunity.

RG 175.143 states the following:

when personal advice is provided to a retail client, other than in an SOA, an SOA must be provided to the client at the same time as, or as soon as practicable after, the advice is provided. In any event, the SOA must be given to the client before the providing entity provides another financial service to the client that arises out of, or is connected with, the advice, such as arranging for a financial product to be issued to the client: s946C(1).

It is a rare situation in which advice is provided prior to the provision of the SOA. The SOA is such an important document these days that most advisers specifically tell their clients that it will be through the SOA that their advice will be communicated. While most advisers discuss options with their clients prior to preparing the SOA, they use the SOA as the main medium for communicating the advice to the client.

But this is not always the case. We have had experiences where advisers met with clients and imparted some or all of their advice, and then took weeks or even more than a month to furnish the SOA. This is too long and clearly breaches RG 175: ‘As soon as practicable’ basically means ‘the next time you are at your computer,’ which for most advisers will be the same or the next day.

What’s more, delaying the provision of the SOA necessarily delays the commencement of the implementation of the advice. This means that the adviser runs a very real risk of losing momentum from the advice process.

And, of course, delaying the SOA necessarily delays the point at which the adviser can be paid for their advice. It goes without saying – but let’s say it anyway – that a client must never be invoiced for financial advice prior to being given a SOA for that advice.

Corporation Act 2001 – Sect 946c does go on to discuss those relatively-few situations in which it is OK for a SOA to be provided at some time after a further service is provided. It is fair to say that these situations virtually never occur, and thus most advisers should never find themselves acting for a client prior to having that client accept the SOA.

The Dover Group