Document ID: chunk:federal_register_of_legislation:F2020L01668:body:0:p5
Version: federal_register_of_legislation:F2020L01668
Segment Type: other
Provision Reference: 
Character Range: 11038–14160

to cancel the registration of a practitioner if their conduct does not meet the expectations of the community.[4]

Insurance – corporate and individual

3.14 The Act requires that both individuals and corporate debt agreement administrators hold professional indemnity and fidelity insurances against the liabilities that may be incurred in working as a debt agreement administrator.[5] Individual debt agreement administrators who operate in their own name (or associated business name) and corporate administrators will be required to hold this insurance.

3.15 However, to ensure there is no unnecessary regulatory burden imposed on individual administrators acting on behalf of a corporate administrator, these individuals will not be required to hold personal professional indemnity and fidelity insurance in their own name upon compliance with all the following conditions:

       * the person is an individual who takes overall responsibility for managing a company's debt agreement activities for the purposes of sub-section 186G(2) of the Act

       * the person will only carry on any activity related to a debt agreement in the name of and on behalf of the associated corporate debt agreement administrator

       * the corporate debt agreement administrator holds adequate and appropriate fidelity insurance

       * the corporate debt agreement administrator holds adequate and appropriate professional indemnity insurance

       * the person is noted in the schedules of these insurance policies that the corporate debt agreement administrator holds.

Insurance – adequate and appropriate

3.16 The Act requires that professional indemnity (PI) and fidelity insurance must be adequate and appropriate and must cover liabilities that may be incurred in working as an administrator.

Adequate PI insurance

3.17 The PI requirement covers claims for breach of professional, fiduciary or statutory obligations. The Inspector-General considers the minimum insured amount is a useful guide to what is adequate PI insurance for registered administrators. However an administrator must review their business operations to determine their own insurance needs and ensure the cover is adequate and appropriate against the liabilities they may incur in working as a registered debt agreement administrator. An administrator may need to seek professional advice to determine this.

3.18 The excess or deductible in an appropriate PI insurance policy must be set at a sufficiently low level for the registered administrator's business, so there is capacity to pay this in the event of a claim.

Appropriate PI insurance

3.19 To meet this requirement the insurance policy should cover civil liability for loss or damage suffered by creditors or others arising from acts, errors or omissions by the administrator or their staff in the course of providing debt agreement services, including negligence, misleading or deceptive conduct or breaches of professional, fiduciary or statutory duties.

Adequate and appropriate fidelity insurance

3.20 An administrator should seek professional advice as to