Obtaining PI is a problem and ASIC knows it

17 December 2019

The Australian Securities and Investments Commission (ASIC) has acknowledged the trouble some financial advisers are experiencing in obtaining professional indemnity (PI) insurance.

The acknowledgement is contained in ASIC’s latest report overviewing licensing and professional registration applications and represents one of the regulator’s first formal acknowledgements that obtaining PI coverage has become an increasing problem for advisers.

However, ASIC’s only advice to advisers who are experiencing problems obtaining PI is that they should start the process early to give themselves time to overcome any issues which would impact on their licensing.

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“We are aware that some applicants are experiencing difficulty in obtaining PI insurance that meets the requirements specified in our regulatory guidance,” the ASIC document said.

It said that the problems it had identified including policies involving a significant excess compared to the premium and the complexity in PI policy terms and unacceptable exclusions to coverage.

“Given the difficulty some applicants are experiencing in obtaining adequate PI insurance, ASIC encourages applicants to engage with their proposed insurer as early as practicable to minimise potential delays associated in finalising a licence application,” the regulator said.

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ASIC is an independent Australian Government body. We are set up under and administer the Australian Securities and Investments Commission Act 2001 (ASIC Act), and we carry out most of our work under the Corporations Act.
Our role under the ASIC Act is to:
- maintain, facilitate and improve the performance of the financial system and entities in it
- promote confident and informed participation by investors and consumers in the financial system
- administer the law effectively and with minimal procedural requirements

"....minimal procedural requirements...". This is not even a PMSL matter.

Keystone cops indeed.

It's time to shut this mess down. The whole thing is a disgrace. And the Ministers just wander around like lemmings, letting it happen. Best solution is to reclassify everyone into a "wholesale" investor, & it will fix just about everything.

Start process early... am I missing something here?

This is a matter the FPA should be representing advisers on. As a small licensee we renewed our cover this year but it was a reminder of just how the big end of town is working to destroy small business planners and I just had to ask why the FPA is not jumping all over this issue. Clearly in favour of AMP to have reduced PI insurers in the market. It's not good for competition. The silence from the FPA is deafening as to whose pockets those guys are in.

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