The Insurance Council of Australia (ICA), insurance providers and underwriters do not anticipate significant increases in the premiums as a result of the tax agent services regime.
The Tax Practitioners Board (TPB) has been in consultation with the ICA, insurance providers and underwriters to address concerns about an increase in PI insurance premiums. The financial planning industry has raised concerns that PI insurance premiums will significantly increase with the registration of tax (financial) advisers into the tax agent services regime from 1 July 2014.
TPB Chair, Ian Taylor said “We worked on two key principles in developing our view on the PI insurance requirements. Firstly we adopted the requirements of the Australian Securities and Investment Commission (ASIC) wherever possible. Secondly, we adopted the principle that in assessing the adequacy of PI insurance cover, practical availability of that insurance at any given time is a relevant consideration.
Mr Taylor went on to say “For the vast majority of financial advisers, we do not expect that tax (financial) advisers will need to get additional PI insurance policies to what they might already hold to meet ASIC’s requirements. We understand that any increase in PI insurance premiums will only relate to extending PI insurance policies to cover tax advice if they do not already do so.”
The TPB has engaged in detailed consultations with the ICA’s PI insurance Committee in regard to the new insurance requirements for tax (financial) advisers. The PI insurance Committee believes that most financial advisory firms will be able to meet the TPB requirements with little difficulty and at minimal additional cost.
Financial advisers who register as a tax (financial) adviser after 1 July must have PI insurance that meets the TPB’s requirements. PI insurance helps provide access to compensation for those who may be exposed to risk of financial loss due to the conduct or advice from a tax (financial) adviser.
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