The Association of Financial Advisers (AFA) has responded to member fears over the corporate regulator’s strict new terms for professional indemnity (PI) cover by teaming with a broker.
Sydney-based Alexis Insurance Brokers has been hired to arrange insurance for the group’s national member base.
By July 1, licensees must have PI insurance that covers loss or damage from bad advice by retail clients and also breaches and fraud by licensees and authorised representatives.
Licensees must also have at least a year’s run-off cover from January 1, 2010, also under ASIC RG126.
“I think the response from the industry has been input into RG126, but ASIC and the Government have acted in response to firstly, consumer protection, and secondly, some of the collapses of providers, so RG126 is here to stay in some form,” AFA chief executive Richard Klipin told InvestorDaily.
“It’s reality, so we have to deal with it.”
The association also considered providing insurance itself, but decided it was not practical due to the variety of planning businesses.
“One of the key roles of our organisation is to use our reach and expertise to assist members when important issues affecting their business practices come along, whether it’s education or PI cover,” Klipin said.
Alexis Insurance Brokers director Christina Kalantzis said the new professional indemnity insurance requirements had made obtaining cover more onerous and complicated.
