FPA pushes for legislation to end PI crisis
TheFinancial Planning Association(FPA) wants to see legislation for a National Professional Standards Act put in place to solve the current professional indemnity (PI) crisis, but said capping PI claims was not a viable option to end the debacle.
Professional standards legislation already exists in New South Wales and Western Australia, but FPA would like to see legislation implemented on a national basis.
In its submission today to the Federal Government’s review of negligence law, FPA also suggested a time limit on lodging claims, so that legal action could only be lodged for three years following the issuance of inappropriate advice to a client.
FPA also suggests insurers approach and assess PI claims in a consistent manner with an understanding of the unique nature of the financial planning industry in mind. Margin lending products, which are often excluded from PI cover because of their associated higher levels of risk, were also addressed, with FPA suggesting that banks develop an industry guide on risk disclosure statements for margin lending products.
TheAustralian Taxation Office(ATO) also came under scrutiny, with FPA suggesting the ATO implement a process to alert financial services licencees to the withdrawal or intended withdrawal of rulings to help manage risk associated with tax effective schemes.
FPA reaffirmed that principal dealer members without professional indemnity insurance would be ineligible for FPA for membership, but said it would continue to work on finding long-term solutions to the current PI crisis.
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