For AFSL‑aligned consulting firms, professional indemnity is not just a tick‑box for licence conditions – it is a critical part of your risk and governance framework. The work you do for product issuers, platforms, licensees and advice businesses often involves complex scopes, reliance on your recommendations and significant downstream impact if something goes wrong. A “standard” PI policy that is not designed for AFSL‑related work can leave gaps that only become visible at claim time.
Key pressure points for AFSL consultancies include advice on product design and distribution, monitoring and supervision, remediation programs, due diligence and compliance support. Claims and complaints may allege failures in governance, monitoring, breach reporting or remediation methodology, not just “bad advice” in the traditional sense. It is important that your PI policy’s insuring clauses, exclusions and sub‑limits reflect the real nature of these services, including how you interact with licensees, authorised representatives and third‑party suppliers.
Licence conditions and regulatory expectations continue to evolve, particularly around design and distribution obligations, conflicts management and remediation. As regulators focus on systems and controls, PI underwriters are paying closer attention to how AFSL consultancies are structured, how they document engagements and how they supervise staff and subcontractors. Demonstrating robust governance, clear engagement letters and quality file notes can support both placement and claims outcomes, and may help you access more tailored terms in a hardening PI market.
Working with a broker that understands AFSL environments can help you move beyond “off‑the‑shelf” PI. A specialist can assist in mapping your service lines to policy wording, addressing issues such as aggregation, subcontractor exposures, run‑off and territorial limits. This approach can give boards and principals more confidence that their cover aligns with licence obligations and the real risks attached to AFSL consulting work.
