Solicitor urges brokers to check insurance policies

by Julia Corderoy25 Sep 2015
A leading solicitor is urging brokers to check their professional indemnity insurance and fidelity insurance policies to ensure they are covered under changes to verification of identity (VOI).

Under Version 3 of the Australian Registrars’ National Electronic Conveyancing Council's (ARNECC) participation rules, in order to meet safe harbour requirements to conduct VOI procedures on behalf of a lender, Jon Denovan, a partner at Gadens law firm told Australian Broker that mortgage and finance brokers must ensure their insurance policies are amended. 

“Each finance broker is going to have to check with their insurance broker that their policy covers the verification of identity (VOI), which it might not specifically. They will also need to check that their insurance covers fidelity insurance. If brokers do that, they will be eligible to conduct VOI within safe harbour,” he said.

Denovan said it isn’t likely to cost a broker any more money to update their insurance, as VOI has always been a part of a broker’s job, however they will need to ensure that their policy is amended to contain a specific clause relating to VOI in writing.

“I expect it wouldn’t [cost more money] because brokers have been verifying people’s identity for banks forever, it has been part of the brokers job. So, their insurer will likely say to them that they are already covered. If that is the case, then that is good.

“However, under the changes, it is possible that banks will ask to see a policy or endorsement which specifically mentions VOI. If I was a broker I would be getting a letter from my insurer to confirm I am covered for VOI.”

According to Denovan, these changes will come into effect in the second week of November.
 

COMMENTS

  • by Peter White CEO FBAA 27/09/2015 8:26:45 AM

    Why Jon - once again this does NOT impact a finance broker or their PI - it never did as finance brokers do NOT act as a solicitor or conveyancer or the agent of either for VOI in the matter of a CONVEYANCE !!

    So this is irrelevant and always was !!!!

    Here's a free tip, the required PI cover under the NCCP that a finance broker has does cover them for VOI of "applicants" they are arranging finance for and the advice in relation to the terms and conditions thereof. So their PI only covers this activity and not VOI for a conveyance (different thing different conduct different activity, and different legislation) - and what's more the PI cover ARNECC are talking about can't be added to a broker's PI it would have to be a separate policy if it applied but it doesn't (unless you are a conveyancer or a solicitor or agent of either anyway) !!!!

  • by Scott Beattie 28/09/2015 9:29:15 AM

    I would expect that if aggregator's aren't already suggesting a preferred insurer, it's only a matter of time before it must be a panel approved PI solicitor to ensure that it meets a minimum standard.

  • by Incognito 28/09/2015 11:54:38 AM

    Jon is looking ahead to when all parties do everything online (via Pexa or other platform under ARNECC).

    Somewhere there must be VOI and practically the broker seems most convenient to everyone (including the lender).

    So although we don't do conveyancing we will probably end up doing the VOI.

    Which is fine but I think is worth another 5 points upfront.. Anyone agree?