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What Financial Services Insurance Covers
Financial services insurance covers the advice, the client money, the data and the directors of a business that operates under a financial services or credit licence: financial planners, mortgage and finance brokers, accountants giving financial advice, fund and investment managers, payment businesses and fintech firms. The licence sets the minimum, and the business sets the rest.
The claims are professional and they are large. A client says the advice was unsuitable and the portfolio lost value. A borrower says the loan should never have been written. A fund's valuation is challenged. A staff member emails one client's financial file to another. A payment instruction is intercepted and redirected. Each of those is a real matter we have seen, and each lands on a different section.
Licensees must hold professional indemnity insurance that meets the regulator's compensation requirements, and authorised representatives are usually required to hold their own cover or to be named on the licensee's policy. The Notifiable Data Breaches scheme applies to the client records every firm holds. The office still needs public liability insurance, and business interruption insurance pays the fee income lost after damage.
Fortis Risk Solutions arranges financial services insurance for licensees and representatives across Australia from offices in Box Hill and Hawthorn, as part of our business insurance range. We read the licence conditions, the authorised representative agreement and the engagement terms before approaching insurers, and we place the professional indemnity insurance with a wording written for the financial services sector.
Who this covers
Businesses in this group include:
- Financial advisers and planners
- Mortgage and finance brokers
- Accountants and tax agents giving financial advice
- Fund and investment managers
- Payment, lending and fintech businesses
- Authorised representatives and corporate authorised representatives
If your business is not listed, ask us. The sections below are the starting point for any business in the group.
Financial Services Insurance: Cover Sections and Benefits
Financial Services Insurance FAQs
A policy that meets the regulator's compensation arrangement requirements: an adequate limit for the size and nature of the business, cover for the financial services the licence authorises, defence costs, fraud and dishonesty of representatives, and a run-off period. Insurers write financial services professional indemnity as its own class, and a general professional wording will not satisfy the licence.
It depends on the licensee. Some licensees hold one policy that names every representative and charge for it; others require each representative to hold cover the licensee approves. Either way the representative should see the certificate and the wording, because a claim against the representative is defended under that policy, and the excess is often the representative's to pay.
Yes. A client's financial documents sent to the wrong person is a data breach, and where serious harm is likely it has to be assessed and notified under the Notifiable Data Breaches scheme. A cyber insurance section pays for the investigation, the legal and privacy advice, the notifications and, where covered, the third party claims that follow. It is the most common cyber claim in financial services.
Theft by a staff member is a crime or fidelity question. Money paid away after a fraudulent instruction, such as an altered settlement email, is a funds transfer fraud question that sits in the cyber section or a crime extension, and it has to be written in, because most wordings exclude it by default. Licensees handling client money should hold both.
Yes. Directors and officers can be pursued personally by the regulator, by shareholders and by clients for the decisions of the firm, and a professional indemnity policy does not answer those claims. Directors and officers liability pays their defence costs and settlements, and management liability adds employment practices and statutory liability for the company.
Financial services wordings turn on the licence conditions, the activities declared, the retroactive date and the exclusions for particular products. FRS helps you disclose the licence and the services accurately, structure the limit to satisfy the regulator and the licensee, compare the specialist insurers who write this class and act as your advocate when a complaint or a regulatory notice arrives. The office itself sits in a standard business insurance package, and the wider sector is covered under our professional services insurance group.
Talk to a broker about Financial Services Insurance
Call 03 7046 3766 on weekdays between 9:30am and 6pm, email admin@fortisrisksolutions.com.au, or send an enquiry and a broker from our Box Hill or Hawthorn office will come back to you about financial services insurance. Tell us what the business does and what the lease or contract asks for, and we take it from there.