Mandatory Disclosures in an SoA: What the Corporations Act Requires

Disclosure is one of the most consistently scrutinised aspects of SoA compliance - not because advisers are unaware of the obligations, but because the way disclosures are documented often fails to satisfy what the law actually demands.

The Corporations Act identifies three distinct disclosure obligations that must appear in every SoA:

• Remuneration, commissions and other benefits (s947B(2)(d), s947C(2)(e))

• Referral fee disclosure (Regulation 7.7.11, Corporations Regulations 2001)

• Conflicts of interest (s947B(2)(e), s947C(2)(f))

This article sets out what each obligation requires, where advisers most often fall short, and what a disclosure that genuinely meets the standard looks like.

Remuneration, Commissions and Other Benefits

The SoA must disclose all remuneration, commissions and other benefits that could reasonably be expected to have influenced the advice (s947B(2)(d), s947C(2)(e)). This obligation is broader than most advisers realise.

It captures benefits received by the providing entity, their licensee, related bodies corporate, directors and associates. Examples that must be considered for disclosure include:

• Advice fees and ongoing service fees

• Trail commissions and product commissions

• Volume bonuses or shelf space fees received by the licensee

• Platform rebates

• Non-monetary benefits such as hospitality or conference sponsorship from product issuers

• Benefits paid to associated entities or related bodies corporate

One of the most frequently missed aspects: advisers often disclose their own fee but leave out what flows to the licensee or broader group. The obligation extends to all of them.

What does an adequate disclosure actually look like?

The preferred form is a dollar amount. Where the exact figure is known at the time of advice, it must be stated. Where it is not known - because it depends on future investment performance or insurance premiums - a percentage, range or written description is acceptable, as long as it is specific enough for the client to understand what they are paying and who receives it.

The difference between adequate and inadequate is stark:

✅ Adequate: "Trail commission: 0.25% per annum of the insured sum, estimated at $480 in year one, paid to ABC Financial Services Pty Ltd (our licensee) by XYZ Insurer."   ❌ Inadequate: "A commission may be payable to your adviser or their licensee in connection with this advice."

The test is whether the client, reading the document, could genuinely understand the nature and scale of the remuneration. If there is any doubt about whether a payment meets the disclosure threshold, include it. The safer position is always to disclose.

Referral Fee Disclosure Under Regulation 7.7.11

This is a separate obligation that sits in the Corporations Regulations rather than the Act - and it is one of the most commonly missing disclosures in practice.

Under Regulation 7.7.11, the SoA must disclose any remuneration the licensee received or is to receive in connection with referring the client to the providing entity. The obligation applies where a client has been introduced by a third party - most commonly an accountant, mortgage broker or real estate agent who received a fee for the introduction.

Three things to know about this obligation:

• It must appear in the SoA itself - disclosing the arrangement in the FSG or a separate document is not sufficient

• Generic statements that a referral arrangement "may exist" are not adequate - the disclosure should identify the referrer and the nature and amount of the fee

• The disclosure obligation falls on the licensee - it is a licensee-level obligation, not just the individual adviser

If your practice has referral relationships in place, audit your SoA templates now to confirm Regulation 7.7.11 disclosure is built in wherever it applies.

Conflict of Interest Disclosure

The SoA must also set out any interests of the providing entity or their associates - financial or otherwise, direct or indirect - that might reasonably be expected to have influenced the advice (s947B(2)(e), s947C(2)(f)).

This obligation is broader than remuneration disclosure. It captures interests that are not payments at all, but that could still affect the advice. Examples include:

• An adviser's personal shareholding in a company they are recommending

• A related body corporate that manufactures or distributes one of the recommended products

• An existing business relationship between the licensee and a product issuer beyond commission arrangements

• A financial interest in a platform that benefits from product placements on it

Importantly, remuneration disclosure and conflict of interest disclosure are cumulative, not alternatives. An interest that constitutes remuneration must be disclosed under both provisions. An adviser who discloses their commission but does not separately address a personal shareholding or related party product arrangement has only partially met their obligations.

The Three Failures ASIC Finds Most Often

Disclosure failures are often identified in the same three areas. If you are reviewing your own SoA template, these are the first things to check.

1. Generic or template disclosures

A disclosure that reads identically across every SoA a practice produces - regardless of the specific remuneration received or product recommended - will not satisfy the requirement. A client receiving advice to roll over their super into a specific fund should see a disclosure that reflects the remuneration connected to that specific recommendation, not a boilerplate about commission structures generally.

2. Incomplete disclosure of associated parties

The obligation extends to remuneration received by the licensee, related bodies corporate, directors and associates - not only the adviser. Practices that disclose the adviser's fee but not the licensee's platform rebate, or that disclose the commission but not the volume bonus structure, are routinely identified as falling short.

3. Missing referral fee disclosure

Regulation 7.7.11 is frequently absent from SoAs entirely, even where a referral arrangement exists and a fee was paid. This is a straightforward compliance gap that creates real risk on audit - and one that is easy to fix with a template update.

Disclosure Is Not a Formality

The disclosure obligations in an SoA exist for a reason: they allow a client to assess whether the advice they are receiving might have been influenced by the financial interests of the person providing it. They are part of the framework that supports trust in the advice relationship.

Every disclosure in an SoA should pass this test: could a client reading it understand - without needing to ask further questions - what is being received, by whom, in what amount or on what basis, and in connection with which aspect of the advice?

If the answer is no, the disclosure does not meet the standard - even if something is technically present on the page.

Not sure your SoA disclosures meet the standard?

RegiReview checks disclosure sections against current Corporations Act and Regulations requirements and identifies gaps before your next audit does.

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