Federal government investigations into professional indemnity (PI) insurance for financial advisers should consider the industry’s regulatory complexity, Aon Hewitt Wealth Management GM Jayson Walker says.

Advisers have complained about the cost and availability of PI cover, prompting Assistant Treasurer Arthur Sinodinos to flag a review of financial advisers’ professional standards.

“I envisage that this would include training, indemnity insurance and any proposed move to a national exam,” Senator Sinodinos told a lunch in Sydney last month.

Mr Walker, who manages the Aon Hewitt finance advice licensing group, says regulatory complexity affects the price and availability of PI cover.

“Reducing the regulatory complexity of advice documents and the way in which clients are engaged and managed will enable the industry to manage far better in meeting clients’ objectives,” he told insuranceNEWS.com.au.

He says independent advisers in small groups “struggle to get appropriate levels of cover at appropriate prices” because it is harder for them to demonstrate rigour around compliance and systems and show they have enough staff to manage “the regulatory quagmire”.

Larger dealer groups have greater access to high-quality legal teams to fight off frivolous claims.

Insurers examine not only how advisers manage risk, but also their claims history and how they manage those claims.

Mr Walker says a national exam, as suggested by Senator Sinodinos, will help improve professional standards and the community’s view of advisers.

But he warns it could provoke an exodus from the profession of older advisers who have the skills and capabilities to meet clients’ expectations.