AT the Insurance Ministers Council meeting held in Perth last week the Law Council of Australia asked the attending ministers to consider future support for the introduction of national professional standards legislation.
Currently two States, New South Wales and Western Australia, have enacted professional standards legislation, in 1994 and 1997 respectively. Legislation in both States is similar in its form and content.
The development of a national professional standards legislation would aim to extend the application of State and Territory schemes to cover Federal practice and liability in Federal law.
The main purpose of such legislation is to guarantee a minimum award of compensation in the event that a claim of professional negligence is proven. However, secondary to this purpose is that the level of claims be reduced as a
consequence of participating in a scheme, which employs structured risk management strategies.
Under the Professional Standards Acts operating in NSW and WA, “occupational associations” can apply to the Professional Standards Council, established by the legislation for a scheme to limit liability in professional negligence claims.
The “occupational association” designs a scheme for approval by the Professional Standards Council, which has the benefit for the association of limiting liability of members by reference to amounts insured, or business assets, or multiple of fees.
The maximum liability must be covered by insurance or by the net assets of the business. Partners and staff of scheme members have the same benefits of liability as the members.
In order to receive approval for a scheme, the association must ensure: that members of the scheme have insurance (or net business assets) covering the relevant level of liability; there is a system for handling complaints and discipline of members; and that a program of risk management is in place.
The benefits to the community of a nationally consistent professional standards legislation would be:
p an increased likelihood of a claim being met, through the requirement of participating associations having a certain level of insurance, or business assets; and
p inclusion into an association’s scheme of consumer protection initiatives such as risk management strategies, professional education, and complaints and discipline procedures.
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