Credit advice
Claims arising from recommendations and the best interests duty.
Mortgage Broker Professional Indemnity
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Mortgage Broker Professional Indemnity
Professional indemnity for mortgage and finance brokers.
Credit licensing requires professional indemnity, and the best interests duty has widened what a claim can look like. The wording needs to match the credit activities actually being performed.
What is it?
Mortgage and finance brokers arrange residential, commercial and asset finance under an ACL or as a credit representative, with obligations including responsible lending and the best interests duty.
What does mortgage broker professional indemnity cover?
Documentation and process
Errors in applications, disclosure and record keeping.
Cyber
Incidents involving the identity and financial data held on applicants.
What affects the cost?
- Loan book size and settlement volumes
- Residential, commercial or asset finance mix
- Licensing arrangement - ACL or credit representative
- Aggregator requirements
- Claims history
Worth raising on the call
- Credit licensing generally mandates professional indemnity with set minimums.
- Aggregators often specify the limit and the insurer criteria.
- Identity data held on applicants makes cyber a normal companion cover.
Claims we are commonly asked about
Loan alleged to be unsuitable
A borrower says they were placed into a higher-cost product than they qualified for and claims the difference plus the cost of refinancing. Best interests duty claims typically focus on the file notes, the credit proposal disclosure and the evidence of options actually considered.
Settlement funds redirected
An email account in the chain is compromised and deposit or settlement funds are sent to a fraudulent account. Whether this responds generally depends on how the wording treats social engineering and funds transfer fraud, which is often a separate section rather than part of the base professional indemnity.
Finance not ready at settlement
An error in the application means unconditional approval is not in place by the settlement date, and the borrower pays penalty interest or loses the deposit. Claims like this are usually about process and record keeping rather than about the advice itself.
Worth confirming in the wording
- Worth confirming which credit activities are inside the declared scope, since commercial, SMSF lending, asset finance and private lending are commonly rated separately from residential mortgage broking.
- Worth confirming whether authorised credit representatives, referrers and loan writers operating under your licence are covered, and whether they are required to be named on the schedule.
- Worth confirming how fraud committed by a third party is treated, because a payment redirected by a compromised email is often addressed under a cyber or crime section rather than under professional indemnity.
Common questions
Is professional indemnity mandatory for mortgage brokers?
Credit licensees are generally required to maintain adequate compensation arrangements, which in practice usually means professional indemnity insurance meeting ASIC's guidance. Credit representatives are commonly covered through their licensee's arrangements, so the practical question is which policy you sit under and what it actually covers.
What limit do aggregators usually require?
Aggregators and licensees commonly specify a minimum limit and sometimes the insurer criteria as a condition of accreditation, and requirements differ between groups. It is worth reading the current accreditation conditions rather than renewing on last year's limit, particularly if your settlement volumes or your commercial lending have grown.
Does my aggregator's policy cover me personally?
It depends on how you are authorised. Credit representatives are often covered under the licensee's policy for credit activities conducted under that authorisation, while brokers holding their own credit licence generally need their own policy. Either way it is worth confirming in writing what is covered and what happens if you move aggregators.
What affects the cost?
The drivers are generally loan book size and settlement volumes, the residential, commercial and asset finance mix, whether you hold your own credit licence or act as a representative, the limit and excess selected, aggregator requirements and claims history. Commercial and SMSF lending typically increase the rating.
General information only. Cover, limits and exclusions depend on the PDS, TMD, eligibility, underwriting and the policy terms. See professional indemnity insurance for the wider picture.
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