ASIC releases second paper on compensation and PI
ASIC has released a second consultation paper on its proposals for compensation and professional indemnity (PI) insurance arrangements for credit licensees.
As part of the National Consumer Credit reforms, this consultation paper calls for further feedback on ASIC’s proposals that all licensees that are not exempt will need to hold PI insurance cover at a set minimum (either $2 million or another amount), depending on the nature of their business.
It further proposes that this cover should include ‘run-off’ cover for claims made after the insurance policy has ended that have arisen from the acts or omissions of the insured during the period of insurance cover. ASIC is seeking feedback about whether this is likely to be available to credit licensees in the current market.
Further consultation was required due to amendments to the compensation requirements set out in the new exposure draft version of the National Credit Protection Regulations, released for consultation on November 20, 2009. The latest version of the regulations contains a new exemption for credit licensees that are regulated by the Australian Prudential Regulation Authority and licensees whose sole business is lending and who do not undertake any non-lending credit activities.
The National Consumer Credit Protection Bill 2009 (the Bill) and the exposure draft regulations require credit licensees to ensure they have adequate compensation arrangements in place. Licensees are required to meet this obligation by holding adequate PI insurance cover, unless they are exempted by regulation. Submissions on the proposals close on December 18, 2009.
Recommended for you
The Australian Financial Complaints Authority has reported an 18 per cent increase in investment and advice complaints received in the financial year 2025, rebounding from the previous year’s 26 per cent dip.
EY has broken down which uses of artificial intelligence are presenting the most benefits for wealth managers as well as whether it will impact employee headcounts.
Advice licensee Sequoia Financial Group has promoted Sophie Chen as an executive director, following her work on the firm’s Asia Pacific strategy.
The former licensee of Anthony Del Vecchio, a Melbourne adviser sentenced for a $4.5 million theft, has seen its AFSL cancelled by ASIC after a payment by the Compensation Scheme of Last Resort.
