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Who must maintain adequate PI insurance (AFSL holders, RG 126)?

The applicability test for Maintain adequate PI insurance (AFSL holders, RG 126) (ASIC), computed across 35 industries, 9 business structures and 6 size bands.

Short answer: Only if

Applies when the business has an AFSL. Where the business has financial products no afsl, check whether you provide financial services (you then need an AFSL or authorised-representative status).

What the obligation is

AFSL holders providing financial services to retail clients must hold adequate professional indemnity insurance.

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.

The applicability test

Applies when the business has an AFSL. Where the business has financial products no afsl, check whether you provide financial services (you then need an AFSL or authorised-representative status).

How the regulator frames it: AFSL holders dealing with retail clients (most AFSLs).

What triggers it: Holding an AFSL with retail authorisations.

Jurisdiction: Commonwealth law, so the test is the same in every state and territory.

Which industries are in or out

Outcome across the 35 industries Rules Mate maps (35 of 35: no).

The answer is the same in every industry: no. Industry does not change who must comply.

Business structure and size

Structure does not change the answer across all industries: for every structure the answer is "no".

Size does not change the answer across all industries: at every size band the answer is "no".

Worked examples

Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:

  • Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: does not apply. Requires an AFSL.

Answers that bring it into scope

Starting from a small or large professional services company that does not otherwise meet the test, each of these single facts changes the engine's answer:

  • The business holds an Australian financial services licence (AFSL): it then applies (AFSL holder).
  • The business issues financial products or gives financial product advice: it becomes worth checking, because it applies only if you provide financial services (you then need an AFSL or authorised-representative status).

When you need to check further

The engine shows this obligation as "check whether this applies" when a business has financial products no afsl. It then applies only if you provide financial services (you then need an AFSL or authorised-representative status). That fact is not something Rules Mate can infer from industry, structure or size.

What you must do, and when

When due
Continuous; PI renewal annually.
Frequency
Ongoing
Evidence to keep
PI policy certificate, broker confirmation of coverage features, ASIC compensation arrangement notification.
Status
Current
Priority
Critical

Penalty for not complying

Maximum penalty: Breach of s 912A general obligations; ASIC licence conditions or suspension.

Audit or assurance level

Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.

Obligations with the same applicability test

If this obligation applies to you, so do these 7: the engine uses the same rule for each.

Where it sits in the corpus

Rules Mate tracks 17 published obligations tagged "financial services", 12 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 0 of those apply outright. This obligation is rated critical priority, and is an ongoing duty.

Regulator, legislation and tools

Regulated by Australian Securities and Investments Commission.

ASIC: Corporate regulator administering the Corporations Act, financial services and credit licensing (AFSL/ACL), markets supervision, insolvency, and registries (ASIC and ABRS).

Corporations Act: The foundational federal Act for Australian corporate law.

Free tools that help with this obligation:

Run the compliance journeyAnswer a short questionnaire about your business and get the obligations that apply to you, with the reason each one applies.Primary action

Questions

Who must maintain adequate PI insurance (AFSL holders, RG 126)?
Applies when the business has an AFSL. Where the business has financial products no afsl, check whether you provide financial services (you then need an AFSL or authorised-representative status).
Do sole traders need to maintain adequate PI insurance (AFSL holders, RG 126)?
No. Across every industry and every size band, the engine's answer for a sole trader is: no.
Do businesses with 1–5 employees need to maintain adequate PI insurance (AFSL holders, RG 126)?
No (1–5 employees, turnover $100K–$1M).
When is "Maintain adequate PI insurance (AFSL holders, RG 126)" due?
Continuous; PI renewal annually.

Related

Sources

Computed by the Rules Mate applicability engine from the published obligation corpus; facts last checked 3 October 2026. Rules Mate is not a law firm and this is general information, not legal advice. Confirm your position with the regulator source or a qualified adviser before acting.