Maintain adequate PI insurance (AFSL holders, RG 126)
AFSL holders providing financial services to retail clients must hold adequate professional indemnity insurance.
Who must comply
AFSL holders dealing with retail clients (most AFSLs).
What triggers it
Holding an AFSL with retail authorisations.
When due
Continuous; PI renewal annually.
Evidence required
PI policy certificate, broker confirmation of coverage features, ASIC compensation arrangement notification.
Max penalty
Breach of s 912A general obligations; ASIC licence conditions or suspension
Summary
Section 912B and ASIC RG 126 require AFSL holders that deal with retail clients to hold adequate PI insurance covering financial services activities. ASIC sets minimum cover levels (currently at least $2M for any one claim) and limited exclusions. EDR-related cover must be included.
Enforced by
Source legislation
Entity types
Topics
Related obligations
- CWLTHComply with AFSL general obligations (s 912A)AFSL holders must do all things necessary to ensure financial services are provided efficiently, honestly and fairly.
- CWLTHAuthorise representatives correctly (Authorised Representative regime)AFSL holders must authorise representatives in writing and notify ASIC of new ARs within 15 business days.
- CWLTHReport reportable situations to ASIC within 30 days (RG 78)AFSL/ACL holders must report reportable situations within 30 calendar days of becoming aware.
- CWLTHComply with Design and Distribution Obligations (DDO)Issuers and distributors of retail financial products must have a Target Market Determination (TMD) and distribute consistently with it.
- CWLTHBan on conflicted remuneration (FOFA)AFSL holders and representatives must not accept conflicted remuneration in connection with retail financial product advice.
- CWLTHMaintain AFCA membership (mandatory external dispute resolution)AFSL + ACL holders must be members of AFCA — sole AU EDR scheme.
Frequently asked questions
- Who must comply with adequate PI insurance (AFSL holders, RG 126)?
- AFSL holders dealing with retail clients (most AFSLs).
- What triggers adequate PI insurance (AFSL holders, RG 126)?
- Holding an AFSL with retail authorisations.
- When is adequate PI insurance (AFSL holders, RG 126) due?
- Continuous; PI renewal annually.
- What is the maximum penalty for adequate PI insurance (AFSL holders, RG 126)?
- Breach of s 912A general obligations; ASIC licence conditions or suspension
- What evidence is required for adequate PI insurance (AFSL holders, RG 126)?
- PI policy certificate, broker confirmation of coverage features, ASIC compensation arrangement notification.
Source: https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-126-compensation-and-insurance-arrangements-for-afs-licensees/. Rules Mate is not a law firm. Always verify against the live regulator source before acting.