The Australian Securities and Investments Commission (ASIC) is investigating professional indemnity (PI) insurance for financial advisers, Deputy Chairman Peter Kell says.

“We are doing a bit of work on the PI insurance sector at the moment to get an idea of levels of availability and cost, and the preliminary results are that the market is fairly stable,” he told the Parliamentary Joint Committee on Corporations and Financial Services.

He says there are about five core insurers in the market, and small businesses can find PI cover difficult to obtain.

“We will be coming out with some results soon that [will] help provide a bit of a picture as to how that market is operating at present.”

Committee chairman David Fawcett asked Mr Kell about the efficacy of models in place for the financial advice industry.

Mr Kell says PI is important but is “no magic bullet” when it comes to dealing with consumer claims.

The number of unpaid decisions through the Financial Ombudsman Service has grown because businesses have collapsed with no PI cover to pay claims.

Mr Kell reiterated ASIC’s view that there is scope for a last-resort compensation scheme for consumers.