the adviser logo

Professional indemnity risks increasing: FBAA

by Reporter5 minute read
Lawyers, court

The Finance Brokers Association of Australia has urged brokers to ensure they hold “adequate” professional indemnity cover as “risks to brokers have risen in the current environment”.

Executive director of FBAA Peter White has called for brokers to review their professional indemnity (PI) insurance arrangements, citing concerns that the current scrutiny of the sector is increasing the risks of claims being brought forward by lawyers, despite there being no “legitimate reason” for claims to increase.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

Mr White added that brokers should be aware that the maximum claim from an approved External Dispute Resolution Facility (EDR) has risen this year, and therefore need to ensure that they have adequate coverage.

In January, the maximum monetary limit on awards (or “compensation cap”) rose from $309,000 to $325,000.


Mr White claimed that brokers may therefore need to ensure that their PI cover is high enough and covers loss brought about by an “error, omission or negligent act in the performance of the professional services covered by the policy”.

“[We] are concerned that risks to brokers have risen in the current environment, notwithstanding that there are no legitimate reasons for claims to increase,” Mr White said.

According to Darren Loades, spokesperson for Insurance Advisernet, approximately 90 per cent of PI claims are lodged via an EDR Facility and “if brokers are not aware of the risks and obligations on their PI policy, they could end up having to pay their own legal costs and subsequent EDR compensation awards as a result of any litigation”.

He said that the percentage of claims the company is seeing in this category is rising rapidly and believes this trend will continue as interest rates eventually increase.

All brokers must be a member of an EDR.

[Related: Broker sued by aggregator in loan fraud case]


Professional indemnity risks increasing: FBAA
court lawyers judge ta
TheAdviser logo
court lawyers judge ta


You need to be a member to post comments. Register for free today


mark lewis fast ta llosc4

In Memoriam: Mark Lewis, 1963–2022

Mark Lewis passed away on Saturday (13 August). Mr Lewis was a well-known identity in the third-party broker...

anthony waldron mortgage choice ta ithtxm

Broker expertise key for securing right loan: Mortgage Choice

The data, which is derived from a June survey of 1,002 broker customers and conducted by Honeycomb Strategy,...

Mark Bouris new ifa

Brokers need to focus on the ‘value-add’: Mark Bouris

With competition among brokers increasing as the number of brokers rises – coupled with the fact that fewer...

Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more