Brokers should be speaking to their CPA clients about their professional indemnity cover now that it has been confirmed that a new scheme will not be made in time for the 7 October expiry of the old one.
“On the 8th of October all CPA Australia public practitioner members will need to cease to use any letterhead or business documents that carry the statutory disclosure statement (or risk potential breaches of Australian Consumer Law); and that, amongst other things, they advise their insurers of changed circumstances regarding limitation of liability and potentially be forced to purchase new insurance policies,” says the Professional Standards Councils (PSC), which assesses and approves applications for professional standards schemes.
This follows a statement from the PSC this week that the current CPA Australia Professional Standards Scheme operating in all mainland jurisdictions to limit members’ liability for negligence will expire, without a new one in place.
“At this point, it is uncertain when a replacement scheme will be in force,” the PSC says. “As an estimate, it typically takes a minimum of six months from publication approval of a scheme to progress through statutory approvals and receive final establishment.”
Earlier, the PSC had voiced concerns about conflicts of interest arising from CPA Australia Advice that had been reported in the press, as it considered the association’s application for a new scheme.
The scheme participants include nearly 7,000 members who have a CPA Public Practice Certificate.
The Professional Standards Authority has now been directed to work with CPA Australia to minimise the effect and duration of the lapse in coverage.
PSC CEO Dr Deen Sanders OAM has said before: “We’ve been encouraging and expecting all CPA members to speak to their brokers and advise them of the change and potentially take out any additional insurance to cover any gaps that may leave them exposed to unlimited malpractice suits.”
CPA Australia’s Chief Operative Officer Jeff Hughes and Public Practice General Manager Peter Docherty said in a statement to members that CPA Australia “continues to work on an active application with the PSC”, reports the AFR.
“Additionally, we are currently finalising planning for a national roadshow to engage with members on risk management and professional indemnity insurance, as well as alternative support strategies.”
For insurance brokers with accounting clients, NIBA would strongly recommend that you contact them proactively to determine if and how they may be impacted by the change.
For CPA members who are going to be impacted, it has been recommended that they review their levels of professional indemnity insurance and approaches to risk management to avoid any gap in cover and reduce their exposure to the risk of unlimited malpractice suits.