ASIC clarifies compensation scenario
Financial planning practices have been reminded by the Australian Securities and Investments Commission (ASIC) that they need to have their professional indemnity (PI) insurance or other arrangements in place by July 1, this year, to comply with the new requirements of the Corporations Act.
ASIC said many licensees would comply with the Corporations Act requirements as laid out in section 912B by obtaining PI insurance, but those seeking approval for alternative arrangements would need to apply to the regulator soon.
The regulator also released an updated version of its Regulatory Guide 126 dealing with compensation and insurance arrangements for Australian financial services licensees.
That updated regulatory guide defines the scope of the coverage required for fraudulent and dishonest acts and dictates that adequate PI insurance policies do not need to explicitly refer to liability breaches but must nonetheless provide cover for such breaches.
AUTHOR
Mike Taylor
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