Zurich’s UK arm scuttles FPA professional indemnity deal
Negotiationsbetween theFinancial Planning Association (FPA)and Zurich London over setting up the association’s own in-house professional indemnity (PI) insurance scheme for members have fallen through.
FPA chief executive Ken Breakspear says Zurich’s decision to abandon the deal followed extensive talks and a thorough tender process and was “disappointing given the potential for a new player in the Australian market”.
Breakspear says the key factor leading to Zurich’s decision was its difficulty in appreciating the intricacies of the Australian market when compared to the company’s experiences in the United Kingdom.
But asMoney Managementreported in March, negotiations originally faltered as a result of the release of the Australian Consumers’ Association (ACA) andAustralian Securities and Investments Commission(ASIC) damning report into advice quality.
It is understood that the results of the ACA/ASIC report led to the UK insurer asking the FPA to provide supplementary information to satisfy its concerns about the financial planning industry in Australia.
As a result of the failed deal, Breakspear says the FPA will now consider changes to its minimum insurance requirements, particularly reinstatements, so FPA members can continue to retain insurance through the domestic market.
He also says the FPA Professional Indemnity Taskforce will be reactivated to consider the merits of other providers and strategies, with the FPA now pushing ahead in discussions with Australian brokers and underwriters to develop a long-term professional indemnity insurance scheme for financial planners.
According to Breakspear, the FPA will also contact other professional associations in an effort to consolidate lobbying efforts for a national professional standards council.
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