CA ANZ made a joint submission to a consultation by the Treasury on Compensation Scheme of Last Resort (CSLR)- enhancing professional indemnity insurance(PII), with CPA Australia, the Institute of Public Accountants and the SMSF Association (joint association).

At CA ANZ, we strongly believe that effective and responsive PII is fundamental to consumer protection and confidence in the retail financial advice system. PII plays a critical role in compensating clients for losses arising from poor‑quality advice or adviser misconduct. However, it is not designed to underwrite product failure or systemic collapses, nor should it be relied upon as the primary response to large‑scale failures.

A key issue we raised is the lack of transparency around how PII is currently responding to claims. There is limited publicly available data on whether claims are paid, unpaid or declined, making it difficult to assess whether PII arrangements are working as intended or where coverage gaps may exist. We have called for improved reporting of PII claims data to better inform regulators, industry and policymakers.

We also support stronger and more consistent oversight by ASIC. While the existing regulatory framework for PII is broadly appropriate, enhanced monitoring including more detailed and regular reporting of PII cover, exclusions and claims outcomes  would improve compliance and strengthen consumer protection without imposing disproportionate regulatory burden.

Importantly, we highlighted growing pressures on the CSLR. In recent large‑scale failures, the CSLR has effectively operated as a default compensation mechanism rather than a true scheme of last resort. We believe regulatory focus must shift decisively toward prevention including stronger governance, conflict management and earlier regulatory intervention to reduce the likelihood of systemic failures that overwhelm compensation arrangements.

CA ANZ’s own approach to PII, as outlined in Attachment two of the submission, reflects these principles. We require members in public practice to hold robust PII that meets clear minimum standards, including a long‑term run‑off cover. These requirements support high professional standards, reduce risk, and improve the availability and effectiveness of insurance coverage.

Ultimately, we believe stronger prevention, improved transparency and effective oversight are essential to protecting consumers, sustaining the CSLR and maintaining trust in Australia’s financial advice framework.

Without public and transparent data, it is not possible to determine if PII is or is not effectively responding to claims covered under the PII policy