The IFSO has voiced its support for the draft disclosure requirements released by the Government last week.
The Government is seeking feedback from the industry on whether the draft regulations achieve the policy intent and if they are workable in practice for the different ways in which advice could be given (see: Give Your Opinion on Draft Disclosure Requirements…).
Insurance & Financial Services Ombudsman, Karen Stevens, says that the draft disclosure regulations look sensible and contribute towards creating better culture and conduct in the industry.
Referring to the Exposure Draft paper, she noted the requirement for information regarding the internal complaints procedure and external dispute resolution to be disclosed twice before a complaint is made by a client.
According to the draft requirements, complaints handling and dispute resolution information must be made publicly available on the financial advice provider’s website if they have one, and on request.
This information is again to be provided when financial advice is given and then finally at the point a complaint about a financial advice service is received.
Stevens said that by the time a complaint is actually made, the client will have already received the information on complaints handling and dispute resolution several times and then can be given more specific information needed at the time of a complaint.
“In our experience, we’ve found that often consumers will not be engaged by receiving complaints information until they’ve actually got a complaint,” she said, explaining that it could be counterproductive to provide clients with too much specific information before they actually have a complaint.
“…we’ve found that often consumers will not be engaged by receiving complaints information until they’ve actually got a complaint.”
She noted that, “In our constitution, one of the obligations on participants is to inform users of the existence of the IFSO Scheme being available to provide a free complaints resolution service.”
However, she added the constitution does not specify when the information must be given but that there is a requirement to give it.
She said the new regulations align with the dispute resolutions schemes in that their members are required to give this information.
On whether the disclosure requirements will ultimately result in a better outcome for consumers receiving financial advice, Stevens said it is a good start in terms of the current overall legislation.
“It’s sufficiently explicit to make sure that financial advisers understand what their obligations will be without being overly prescriptive and telling them what they must say to their clients. I think that would be to some, quite helpful, but to others, too much regulatory interference in their client management.”
Click here to read the Exposure Draft of the Disclosure Requirements.