New member organisation, the Certified Independent Financial Advisers Association (CIFAA), has announced an arrangement to reduce professional indemnity (PI) costs for members.
The body, which was founded in June, had entered into an arrangement with WTW – formerly Willis Towers Watson – for WTW to arrange PI insurance cover with an Australian and London insurer for its membership.
The recent exit of insurers such as AIG, Dual Australia, Vero and Axis from the Australian PI market had made it more difficult for advisers to obtain their PI insurance and their costs were often increasing as a result. This was compounded by the fact that overseas insurers could be reluctant to insure Australian advisers as they were deterred by actions prior to the Hayne Royal Commission.
The association said the new membership of the body was highly educated, thanks to recent regulatory educational requirements, which was appealing to insurers.
CIFAA president, Chris Young, said: “CIFAA members must operate under S923a of the Corporations Act which deals with independent financial advice. This imposes significant restrictions on types of remuneration and associations with product manufacturers. That means that PI claims linked to imbedded conflicts and, therefore, product failures, are less likely.
“CIFAA can arguably boast that while its membership is still relatively small, the education standards are proportionally, the highest of any financial adviser association operating in Australia. That flows through to the way they run their practices.”
Brett Sampey, associate director – FINEX at WTW said: “WTW has been able to arrange PI cover with an Australian and London insurer for CIFFA members. We look forward to helping CIFAA members secure the benefits.”
