The corporate regulator has expressed concerns over the lack of transparency around what professional indemnity (PI) insurance cover advice licensees have, with potential action to come.
ASIC revealed the finding was part of a market scan of the PI insurance market conducted by the regulator, between November 2024 and February 2025, for AFSLs that provide personal advice to retail clients.
Along with issues of coverage opacity, ASIC said another concern was the time it takes to finalise claims.
“We have noted these findings and are considering ways in which these issues and concerns may be addressed,” ASIC said.
Howden Broking partner Jared Timms said it’s the role of insurance brokers to make sure the full scope of services that the client offers are communicated to underwriters and included within the professional services description and that the policy wording is fit for purpose.
“I therefore wouldn’t say that there is a lack of transparency in regards to cover, but a responsibility to ensure that it meets the requirements of the client, and would add that moving strictly based on price can therefore be a risky move,” Timms told Professional Planner.
“In addition, claims handling with local carriers will always be more efficient and so is another consideration when deciding who to place business with.”
The regulator found between 2020 to 2025 there was a significant reduction in the number of AFSLs reporting PI-related breaches (i.e. they don’t have PI or can’t obtain adequate cover), as well as a reduction in AFSLs seeking relief or exemptions from the requirement to hold PI insurance, according to ASIC.
The regulator said there are fewer AFSL applicants citing difficulties with obtaining PI insurance.
ASIC said the review noted the cyclical nature of the PI insurance market but found significant improvements in PI insurance market conditions, including more supply and competition, return to profitability, premium reductions and reduced claims.
The fall out of the Hayne royal commission led to a raft of providers withdrawing their services in late 2019, which has since shown signs of rebounding.
However, a recent Financial Services Council green paper also called into question the lack of oversight ASIC has over PI coverage held by AFSLs.
FAR dataset update ahead of experience pathway deadline
ASIC also announced AFSLs could access a “one-off, point-in-time” dataset to help them identify information on the Financial Advisers Register that needs to be corrected or updated.
From 15 August 2025, this updated dataset will include if an AFSL has notified ASIC that a relevant provider has made a declaration that they are relying on the experienced provider pathway to meet the qualifications standard and the date the relevant provider passed the exam.
AFSL are required to ensure the information recorded on the FAR is correct for the relevant providers they authorise and otherwise notify ASIC of incorrect or out of date information within 30 business days to avoid a late fee.
“It is an offence to knowingly provide false or misleading information to ASIC or to fail to take reasonable steps to ensure that the information provided to ASIC is true and correct, which includes updating the Financial Advisers Register,” ASIC said.
ASIC’s spot checks have found common errors including advisers being marked as eligible for the experience pathway when they are not, qualifications and training courses marked as going toward meeting the education standard when they aren’t an approved course of study, and no or incorrect information about whether the adviser can provide tax (financial) advice services.
ASIC said it had issued 12 warnings and reprimands to relevant providers who provided personal advice to retail clients for relevant financial products while unregistered.
“If a relevant provider gives personal advice while unregistered, they will be in breach of a restricted civil penalty provision and may be subject to regulatory action,” ASIC said.
“The relevant provider’s authorising AFS licensee will also have committed an offence of strict liability and contravened a civil penalty provision.”
