An Australian Securities and Investments Commission probe into lead generation services has flagged concerns around professional indemnity insurance.

The commission says it wrote in April to 15 PI insurers about the “risks involved in high-volume superannuation switching advice business models using lead generators.

“Several insurers have confirmed they will consider those risks when underwriting relevant [Australian financial services] licensees.

“Eight of the licensees included in our review had informed their insurer that they used lead generation services, and one was proactively contacted by its insurer after being included on our public list of entities involved in lead generation.”

ASIC’s report on the use of lead generation services by 15 AFS licensees and their representatives identifies inadequate controls by some licensees, including limited access to lead generator call recordings, heavy reliance on manual supervision, insufficient monitoring of product recommendation patterns and inadequate limits on adviser client volumes.

“Licensees permitting or using lead generation models are putting their licence at risk,” the report says.

“If a licensee does not know what their representatives and outsourced service providers are doing, if they cannot produce the records needed to test compliance or fail to intervene when warning signs emerge, they are exposing consumers to harm, are not complying with their legal obligations and are putting their AFS licence at risk.”