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The MFAA and FBAA appear divided over proposed legislative changes to professional indemnity insurance.
Earlier this week, the MFAA called on its members, as well as FBAA members, to support its lobbying efforts to stop the proposed changes put forward by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC), which the MFAA says will threaten broker business costs.
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“What is being proposed by ARNECC is an increase of professional indemnity insurance to $20 million in the aggregate from a current figure of $2 million per claim and up to $6 million in the aggregate,” MFAA chief executive Siobhan Hayden said.
“The industry standard of $2 million in the aggregate is demonstrably sufficient.
“This proposed requirement has no basis in fact as it does not reflect any existing claims and flies in the face of the requirements our industry regulator ASIC expects,” she said.
In addition, Ms Hayden argued that the insurance industry is as yet unable to quote a premium at this level.
“This is reflective of the non-consultative approach this body has taken,” she said.
Ms Hayden added that the proposed change would deliver a blow to small business owners and pose a threat to brokers.
“Our industry is proudly based around small business owners and this would deliver a real cost impact to their livelihood. The change would force many to have to take their customers into a banking brand for identification purposes which is a direct threat to the customer competition that finance brokers offer Australians,” she said.
Meanwhile, the FBAA has hit back at the MFAA’s lobbying efforts to stop proposed PI insurance legislation, labelling it as a form of “scaremongering”.
The association said recent lobbying efforts against proposed PI insurance legislation are “misguided”.
FBAA chief executive Peter White made reference to a recent news story that reported on proposals by the MFAA, which he claimed “has no great influence in this field, and would only affect anyone who acts as an agent for lender, solicitor or conveyancer on conveyancing matters for verification of identification”.
“Even if the proposals carried any weight, they would apply to probably less than one per cent of brokers, and then only on conveyancing activities not broking activities,” he added.
Mr White said he was surprised the MFAA publicly called on FBAA members to support them without consulting the FBAA first.
“We have already dealt with this issue at a higher level and would not want to see our members wasting their time supporting lobbying efforts against an issue that will likely never eventuate and is clearly not properly understood by those coordinating the lobbying,” he said.
“The FBAA continues to liaise with key stakeholders on this issue, and have sought further clarification from them… Most of them were as surprised as we were to read this speculation.
“The best way forward is continued consultation at senior levels, not low-level scare tactics that sends the wrong message to brokers.”
[Related: Government takes aim at brokers and agents]
