Indemnity plan slammed
The Financial Planning Association has hit back at the prospect of increased professional indemnity insurance requirements, flagged as part of the government's moves to cut investment fraud in superannuation.
The federal government has left open the door for an industry-wide "last resort" compensation scheme for losses racked up by super funds including the self-managed sector.
The government also said it would consult on possible changes to boost the professional indemnity insurance requirements of financial services providers.
It would do this to "improve the capacity of a licensee to pay compensation when required at levels assessed to be adequate for their business", and to "provide a more rigorous regulatory platform for considering a last resort scheme".
But the association said such requirements "would not solve the problem, but simply increase costs and further restrict financial advisers in servicing consumers due to increased costs and red tape".
The moves are part of a response to a parliamentary committee investigation into the 2009 collapse of Trio Capital and a review of compensation for superannuation investors by Richard St John.