PI cover not on AFSLs
Townsend Business and Corporate Lawyers has warned financial advisers to check that the Australian Financial Services Licence (AFSL) they operate under includes professional indemnity (PI) cover.
Townsend said some boutiques were not providing PI to new advisers and stressed the importance of checking if it applies when switching AFSLs.
It said high turnover rates meant checking PI cover was very important for advisers changing AFSLs.
Advisers should check the adviser agreement for the AFSL to ascertain if PI is included as well as scrutinise the terms and conditions of PI coverage, according to Townsend, which also suggested advisers may need their own coverage.
Ensuring the PI extends to all the sectors of advice the adviser gives, such as shares and property, is another concern when switching AFSLs, Townsend said.
It said if the ASFL gets too many claims against it, an adviser's premium may increase.
According to Townsend, an adviser should find other options for PI cover if the new AFSL has too many conditions or the cover is too expensive.
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