The Australian Securities and Investments Commission (ASIC) is to check that financial advisers’ authorised representatives have adequate professional indemnity (PI) cover.

About a quarter of the largest licensees say their authorised representatives hold their own PI insurance, the regulator says.

ASIC wants to ensure the policies are suitable.

“In such cases it is important that licensees ensure their authorised representatives are covered by compliant PI insurance because licensees are liable for the conduct of, and business written by, their representatives,” it says in a statement.

“We expect appropriate monitoring and controls to be put in place to manage this risk.”

ASIC says its latest review of large financial advisers does not support claims they are finding it hard to get PI cover.

The regulator surveys the largest advisers to retail clients, to check their risk management and compliance systems.

The new report – on the 21st to 50th largest advisers, with a total 1.35 million clients – says many PI policies exclude riskier products.

“In each case, respondents advised that they did not offer such products or services.”

Industry sources have claimed financial services providers are considered high-risk following the global financial crisis, when clients began suing for losses.

ASIC’s report says advisers are trying to mitigate key risks but there are still potential conflicts of interest over ownership and income from product issuers. Product concentration is a significant risk, and the regulator also found non-compliance with legislation.