Regulatory Guide 210 - Compensation and insurance arrangements for credit licensees CPD
There are minimum requirements set for the amount of PI insurance cover that credit licensees should hold. This amount of PI insurance required should be assessed on a sliding scale whereby the policy should cover at least $2 million per claim and in the aggregate and cover should be approximately equivalent to actual or expected revenue form credit activities relating to consumers (up to the capped maximum of $20 million).
If you are a credit licensee (and not also regulated by APRA) you must have adequate arrangements in place for compensating consumers: see RG 210.1–RG 210.6.
The primary way to comply with this obligation is to have professional indemnity insurance (PI insurance). ASIC may also approve alternative arrangements.
ASIC will administer the compensation requirements with the objective of reducing the risk that credit licensees cannot meet claims for compensation, due to insufficient financial resources: see RG 210.7–RG 210.14.
Whether a PI insurance policy for credit licensees is adequate depends on the amount and scope of cover and the relevant terms and conditions of that policy. Also Licensees may require Authorised Credit Representatives to carry their own PI insurance. Please consult your licensee in regard to their PI requirements.