Gaps exist in the professional indemnity (PI) market for financial advisers, the Australian Securities and Investments Commission (ASIC) says.

All financial services licensees must have arrangements to compensate clients, which generally means holding adequate PI insurance, with minimum requirements stated in Regulatory Guide 126.

The market is stable and generally available, but some products do not meet the requirements, an ASIC report has found.

The review was a response to licensee concerns and the high level of unpaid determinations from external dispute resolution schemes.

“Advice businesses must have adequate PI insurance, and they should make sure this cover measures up with our requirements in [Regulatory Guide] 126,” ASIC Deputy Chairman Peter Kell said.

“ASIC will follow up with surveillance of advice licensees’ PI insurance, and if we find problems we will take enforcement action.”