PI changes not solution to adequacy, cost concerns
The corporate regulator is not seeking any changes to professional indemnity (PI) insurance requirements for advisers stating that ‘tinkering' would not deal with problems related to claims or disputes.
Speaking at the Money Management PI Insurance breakfast in Sydney this morning Australian Securities and Investments Commission (ASIC) deputy chair Peter Kell said "no amount of massaging or tightening of arrangements will deal with the problems" relating to adequate levels and costs of PI cover for advisers.
Kell also said that changing PI requirements would not deal with low levels of PI cover seen in some disputes heard by the Financial Ombudsman Service.
"There is no magic answer to limits of PI by tinkering with PI requirements. ASIC is not of view this will happen," Kell said.
He reiterated ASIC's support for a last reset compensation scheme that would only provide compensation when all other resources had been exhausted.
"Any compensation framework should not be viewed in isolation, but as part of broader set of improvements in the sector including reducing conflicts, having higher standards and better access to advice," Kell said.
"In our current submission to the Parliamentary Joint Commission we have suggested ways to improve advice and standards as well as further reforms being made to ASIC's licensing toolkit."
"ASIC view is that the entry level for licensing is too low and ability to take people out of industry is too hard. We are seeking the discretion to refuse a license if a manager or director has been part of past failure or does not have membership of an external dispute resolution scheme.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
