ASIC reveals attitude on PI
Amid concerns expressed by some advisers that the lack of insurers in the Professional Indemnity market is actually influencing asset allocations, the Australian Securities and Investments Commission (ASIC) has indicated its reluctance to easily grant relief in the area.
That unwillingness was revealed in the regulator's report on relief decisions made between June and September last year, in which it pointed to its reluctance to grant relief to an Australian Financial Services licensee seeking relief from the requirement to hold PI cover for the provision of general advice because of an inability to obtain cover.
The ASIC report said the applicant had claimed to have been refused coverage by a number of PI insurers because the underwriters did not cover the provision of general advice.
Stating the reasons it was unlikely to have granted the relief, the ASIC report said:
"We considered refusing the relief for the following reasons:
* under RG 126, we do not grant exemptions for PI cover for the provision of general advice;
* although the applicant had sought cover from a list of PI brokers, the list was not exhaustive and did not cover a list of brokers commonly used by AFS licensees;
* insurance brokers do not generally refuse cover unless there is a poor track record or the business presents an unusually high risk exposure; and
* a search of ASIC databases indicated that there were a number of reports of misconduct in relation to the applicant.
In the end, ASIC did not end up making a definitive decision, saying it had been "subsequently advised by the applicant that it had successfully applied for PI insurance" and therefore withdrew its application for relief.
AUTHOR
Staff Writer
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