The Insurance Council of Australia has played down concerns that PI insurance premiums may rise under the new tax agent services regime, anticipating “minimal additional cost” for advisers.
The Tax Practitioners Board (TPB) – which advisers who provide ‘tax financial advice’ will be required to register with from July – has been in negotiations with PI insurers and their lobby group, the ICA, after concerns were raised by the financial advice community that new requirements would result in a spike in PI costs.
“For the vast majority of financial advisers, we do not expect that tax (financial) advisers will need to get additional PI insurance policies to what they might already hold to meet ASIC’s requirements,” said TPB chair Ian Taylor in a statement yesterday, reflecting on indications given by the ICA.
“We understand that any increase in PI insurance premiums will only relate to extending PI insurance policies to cover tax advice if they do not already do so.”
The ICA’s PI insurance committee believes that “most financial advisory firms” will meet the new TPB requirements set out in the amendments to the Tax Agent Services Act with “little difficulty and with minimal additional cost”.
At the same time, Mr Taylor made clear that “financial advisers who register as a tax (financial) adviser after 1 July must have PI insurance that meets the TPB’s requirements”.
Mr Taylor said the TPB has devised an approach that takes the availability of PI insurance coverage for financial advisers into account, as well as the corporate regulator’s stipulations.
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