Professional standards legislation has progressively been enacted in each state and territory over the past 25 years. Its creation by state and territory governments, and recognition by the Australian Government, was in response to the insurance crisis of the 1990s and early 2000s, which saw a sharp increase in the number and size of successful claims against providers of professional services. In turn, insurance premiums rose to levels that became unaffordable for professionals, resulting in a lack of protection for consumers who were entitled to compensation. Consumer protection is the fundamental aim of the legislation, achieved through, among other things, the limitation of civil liability for occupation members that participate in schemes, which require them to improve their professional standards and the association to implement risk management strategies. The Professional Standards Councils of each state and territory administer the professional standards legislation in a co-operative and harmonised national regulatory system.
Having a professional standards scheme approved by the Professional Standards Councils demonstrates the association’s commitments to the objects of professional standards legislation in improving professional standards and increasing consumer protections. The mandatory professional indemnity insurance requirements of a scheme provide consumers with confidence that in the event of a successful negligence claim being made against a member of an association participating in a scheme, there is access to compensation under the required insurance policy up to the limitation of liability cap set by the scheme.
Further to the mandatory insurance requirements of the scheme, the Professional Standards Councils provide encouragement, assistance, and advice to an occupational association through the association’s development of their application for approval of a scheme, and through supervision activities over the life of the scheme. This includes standards, systems and processes to be administered by the association, such as:
When the Councils approve a scheme, a regulatory relationship between the Councils and the association is created. The Councils oversee the association’s regulation of its members. This relationship has 3 key aspects:
Associations enter this regulatory relationship voluntarily. However, once a scheme is approved by the Councils, compliance obligations are mandatory. If an association cannot meet these obligations, the relevant Council may review and revoke its scheme.
Applying for a professional standards scheme is an intensive process. And for most associations, having a scheme will require a significant step up in their professional standards systems and regulatory capacity.
Contact us about applying for a scheme and we’ll organise a time to meet with you to provide further information and discuss whether a professional standards scheme is right for your association.
