At least three licensees have sought legal advice from Smith about the possibility of restructuring or removing the recommended product list altogether, while keeping within their professional indemnity requirements.
“The super-switching debate and issues related to research on the ‘from’ fund are the main triggers for the licensees to question how they structure their APLs, what they are needed for, and indeed whether they are needed at all,” Smith said, adding AMP’s enforceable undertaking had only heightened licensees’ concerns.
While licensees are not required to have an APL by law, Smith said the need for them had come about as a means of managing compliance and minimising risk. But they have become further entrenched by professional indemnity insurance policies.
“Usually the APL or a reference to it is found somewhere in the [PI insurance] policy statement.with words to the effect that they will only indemnify you if the product has gone through an approval process,” Smith said.
The licensees who had approached the law firm were not isolated cases, according to Smith.
“I’m quietly confidant a number of different lawyers across the industry are being approached by licensees to look at how their APLs are structured and whether they need it at all or if they can supplement it with something,” she said.
