Being granted an Australian Credit Licence has many responsibilities, in particular the requirement to maintain current Professional Indemnity Insurance. There may be financial penalties, loss of accreditation, refusal by the insurer if there is a claim made against you in that period if you let your PI Insurance Policy lapse. As part of our compliance monitoring, Connective has a reminder notification that will be emailed to you 30 and 10 days leading up to the expiry date of your PI Insurance Policy. Once you have renewed your insurance, please upload your new certificate of currency using the link provided or send through your new PI Policy to [email protected] and we can update our compliance records. We appreciate your assistance in renewing your policy well in advance of the expiry date.

You must have adequate arrangements in place for compensating consumers. The primary way to comply with this obligation is to have Professional Indemnity insurance (PI insurance).

Under ASIC RG210.1 Under s48(1) of the National Consumer Credit Protection Act 2009 (National Credit Act), a credit licensee must have in place adequate arrangements for compensating consumers for loss or damage suffered because of breaches of to the National Credit Act by the licensee or its representatives. If a licensee is subject to the requirement to hold PI insurance, then it must hold a policy that provides at least $2 million in cover per claim and meets the other requirements we have set in relation to the scope of the cover.

Credit licensees must meet the compensation requirements in order to undertake credit activities and therefore must hold PI insurance cover that is adequate - having regard to:

(a) the Credit Licensee’s membership of an approved EDR scheme, taking into account the maximum liability that has, realistically, some potential to arise in connection with:

(i) any particular claim against the licensee; and

(ii) all claims in respect of which the licensee could be found to have liability; and

(iii) relevant considerations relating to the regulated credit business carried on by the credit licensee, including:

This is not an exhaustive list of the factors that credit licensees need to take into account in assessing what PI insurance cover is adequate in their circumstances.

The following factors are particularly relevant in determining whether a PI insurance policy for a credit licensee is adequate:

(a) the amount of the cover;

(b) the scope of the cover; and

(c) whether the terms and conditions of the cover undermine the overall effect (e.g. by excluding cover for key aspects of the credit licensee’s business).