ASIC oversight of PII coverage inadequate

Mike Taylor

Managing Editor/Publisher, Financial Newswire

16 March 2026

The generally larger financial advice licensees which are members of the Financial Services Council (FSC) believe the Australian Securities and Investments Commission’s current approach to overseeing professional indemnity insurance coverage is inadequate.

In doing so, the FSC has questioned the value of the current regime which allows AFSLs to self-report on PII.

The FSC is urging that AFSLs be required to provide ASIC with a statement a certificate of insurance each year as part of their annual audit requirements.

The FSC has used its response to the current Treasury consultation on enhancing the effectiveness of PII insurance to state that its “members report that the current approach to ASIC’s PII oversight for AFS licensees is largely inadequate in ensuring market participants are meeting their licensing requirements”.

The submission said this is especially the case with respect to the ongoing monitoring of the adequacy of licensees’ PII cover where a more active role by the regulator may be appropriate”.

“The existing ongoing oversight over PII arrangements, through which AFS licensees self-report on the status of their PII cover through their annual financial statement returns is sub-optimal,” the submission said.

“This level of reporting does not provide the appropriate level of data for the regulator to appropriately assess and monitor the continued existence and adequacy of a licensee’s policy and coverage.

“We are concerned that, with reliance on upfront compliance at initial licensing, some licensees may adopt a set and forget approach, either allowing their coverage to lapse following initial licensing, or not reviewing their arrangements to ensure they maintain adequate coverage.

“This may also lead to poor understanding or prioritisation of coverage amongst practitioners. Survey data completed by CoreData for the FSC revealed that almost half of practitioners don’t know what type of PI claim coverage they have at present,” the submission said.

“Inadequate or non-existent coverage by some licensees poses a risk (and cost) to the entire sector. The FSC considers that stronger ongoing reporting requirements including more granular data reported through to the regulator would place greater emphasis on licensees’ responsibility to maintain adequate ongoing PII coverage.”