ASIC urged to verify AFSL’s PI standing yearly | Australian Markets
Australian Monetary Companies Licensees ought to be made to show the currency of their skilled indemnity (PI) insurance coverage on an annual foundation to help relieve stress on the Compensation Scheme of Final Resort (CSLR).
The SMSF Affiliation has urged that the Australian Securities and Investments Fee (ASIC) take a more proactive strategy to regulating the sector, together with checking the standing of PI cowl.
“ASIC should build stronger engagement channels with the sectors it regulates. This could include establishing dedicated working groups to provide industry insights and share information more readily, including alerting the regulator to potential red flags,” it informed the Treasury review of the CSLR.
“Importantly, this must be genuine two-way communication for this measure to be effective,” it mentioned.
“Another important factor to ensure the viability of the CSLR is to ensure that all AFS licensees continue to hold appropriate PII cover,” the SMSF Affiliation mentioned.
“It is our understanding that ASIC currently only assesses if PII cover is appropriate for an AFS licensee at time of application or as part of a surveillance activity. The SMSF Association recommends that ASIC requires AFS licensees to demonstrate, on an annual basis, that they continue to hold appropriate PII that meets their statutory obligations.”
The SMSF Affiliation mentioned this might be achieved by requiring AFS licensees to submit a copy of their PII Certificates of Foreign money when lodging their annual FS 70 and FS 71 kinds.
“While ASIC may not have the resources to review each individual certificate of currency for compliance, it could analyse samples from each relevant sector to confirm compliance or identify any emerging risks that may need early intervention within a sector,” it mentioned.
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