Advisers fear professional indemnity insurance impacts from the recent spate of failures in managed investment schemes.

“It remains an ongoing [concern],” Financial Advice Association of Australia policy, advocacy and standards GM Philip Anderson told the federal inquiry into small business insurance.

“Premiums have been abating a little bit, but we don’t know whether that’s going to continue.

“We don’t know the extent to which some of the major collapses we have seen in the MIS market are likely to contribute to a deterioration in the [PI insurance] market.”

PI cover is compulsory for the profession and most advisers operate as small businesses.

The association’s submission to the parliamentary inquiry said PI insurance is a material cost for financial advice businesses, influenced by a range of market factors such as availability.

Mr Anderson said: “It’s the way that insurers choose to enter and exit the market that causes us the most concern. There was a period a few years back when it became quite difficult to access cover and that is a particularly challenging situation for a financial firm because PI cover is mandatory.”

The Joint Committee on Corporations and Financial Services inquiry is expected to report by October 27.