The Financial Planning Association (FPA) has formally expressed concern about whether professional indemnity insurance will cover legacy complaints being handled by the Australian Financial Complaints Authority (AFCA).
In a submission filed with AFCA, the FPA raised its concerns which flow from moves by the Government to allow AFCA to deal with complaints dating back up to 10 years.
In particular, the FPA submission warned that the changes had the potential to impact professional indemnity (PI) costs for financial planners.
The FPA submission said that while it supports the intent of the measure, it had concerns about whether PI policies will cover potential legacy complaints reaching back more than 10 years.
Commenting on the impact of the changes, FPA chief executive, Dante De Gori said his organisation had concerns regarding the rules change as proposed in the consultation paper.
“It is unclear whether the consideration of the AFCA Ombudsmen will be based on the law, codes, guidance and good industry practice available at the time the conduct occurred, rather than the current standards,” he said.
“We are concerned about whether professional indemnity policies will cover potential legacy complaints,” De Gori said. “If PI cover does not extend to legacy complaints under the conditions set in the proposed rules change – particularly in relation to the application of the 30 June 2019 rules, jurisdiction and monetary limits to legacy complaints – this will have a significant impact on the ability of licensees to pay any determinations made by AFCA in relation to legacy complaints.”