July 2024
Changes to fidelity and professional indemnity insurance requirements
Settlement agents are governed by the Settlement Agents Act 1981 (the Act) and the Settlement Agents Code of Conduct 2016 (the Code of Conduct) made under the Act. The Act provides for the licensing and compliance of settlement agents in Western Australia.
The Commissioner for Consumer Protection administers the Act and the Code of Conduct and is responsible for maintaining industry standards.
In accordance with the Act, the Commissioner has entered into a Master Policy Agreement with Vero Insurance (brokered by Marsh Insurance Brokers) for the provision of fidelity and professional indemnity insurance for settlement agents licensed under the Act.
The Act requires that all settlement agents holding a triennial certificate, remain insured under the Master Policy Agreement and hold a current certificate of insurance. If a settlement agent does not hold a current certificate of insurance, it is taken that the settlement agent does not hold a valid triennial certificate.
Ability to waive insurance requirements
Previously, the Act provided the Commissioner the ability to waive the insurance requirement for settlement agents that were not operating a business under their own licence, and who were acting in roles such as a person in bona fide control or a branch manager.
With the introduction of Automatic Mutual Recognition legislation into Western Australia, a subsequent amendment was made to the Act which removed the Commissioner’s power to waive this insurance requirement. As a consequence, settlement agents who act as the person in bona fide control or branch manager must now also hold a current certificate of insurance to ensure their triennial certificate is deemed valid.
Impact on settlement agents
Settlement agents that act as the person in bona fide control or a branch manager no longer hold a valid triennial certificate if they do not hold a current certificate of insurance.
Consequently, settlement agents that employ a person in bona fide control or branch manager no longer meet the requirements of the Act unless that person in bona fide control or branch manager holds a current certificate of insurance.
Recommended action
The Commissioner has determined that all settlement agents are required to hold a current certificate of insurance.
Applicants renewing or applying for a new licence are required to provide the Commissioner with a certificate of insurance under the Master Policy.
Settlement agents that employ a person in bona fide control or branch manager must ensure that the certificate of insurance notes the individual’s name as the “Insured”, along with that of the trading entity. There are no extra costs associated with this requirement.
Settlement agents who are currently acting in such roles and are not yet due for renewal, are encouraged to have their name added to the trading entity’s certificate of insurance and provide a copy to the Commissioner as soon as practicable.
There is no change to the current requirements for those settlement agents who trade as a sole trader.
The Commissioner is currently working with Government to amend legislation, making it easier for those affected to comply with the requirements of the Act.
For enquiries about these requirements contact Consumer Protection Licensing on 1300 30 40 64 or by email.
For Master Policy Insurance matters, email Marsh Insurance Brokers at kylie.zoghbi@marsh.com or delene.kemp@marsh.com
Certificates of insurance can be sent to cplicensing@demirs.wa.gov.au.