The Financial Planning Association (FPA) and Association of Financial Planners (AFA) are considering applying to join a new indemnity scheme for peak professional bodies offered by the Professional Standards Council.
They stand to become the first peak financial services bodies to join the new Federal Government-supported scheme if and when either applies for the necessary ‘prescription’ under relevant Commonwealth legislation.
Prescription under the legislation, including the Australian Securities and Investments Commission Regulations 2001, will effectively protect eligible FPA and AFA members with a cap on their liability for civil damages.
In turn, the cap will help to “keep professional indemnity (PI) cover for the associations’ members affordable and ensure the public can continue to access their services”, a Federal Treasury spokesperson said.
To be eligible, peak bodies would have to “prove they are committed to professional development and that their members have to uphold risk management strategies and have good customer complaint mechanisms in place”, the spokesperson told Money Management.
She said she “would’ve thought it would be in the interests of planners to receive the cap, but unfortunately, no financial services organisations have applied to join the scheme to date”.
FPA media spokesman Jason Spits said the organisation was currently assessing the merits of the scheme based on its potential benefits for members, as part of a broader consideration of PI insurance.
Once this review is complete, he said, the FPA would make a proposal “to our members to gauge their reaction, and then make a final decision at board level on whether to proceed”.
AFA chief executive Richard Klipin said the organisation was keeping an “open mind” on the scheme, with a view to “potentially asking members if it’s something they would consider as beneficial”
