Consumer information

How Professional Standards Schemes protect you

Consumers are entitled to approach the courts to seek damages against a professional service provider who has failed to discharge their duty properly.

But unfortunately, it’s not uncommon for a consumer who is awarded damages to miss out on payment because their service provider is inadequately insured, and may be forced into bankruptcy. This is a hollow victory – one that, due to legal costs, can leave the consumer in an even worse financial position than before.

A unique approach to consumer protection

The Australian state and territory governments have taken a globally unique and innovative approach to this dilemma by introducing professional standards legislation. This seeks to strike a balance between:

• Making sure that where damages are awarded for certain claims against professionals, the full amount of compensation awarded is available to the vast majority of consumers, and
• Requiring rigorous standards of professional conduct, so claims for negligence are reduced.

The legislation strikes this balance by enabling the creation of Professional Standards Schemes. These formally limit liability for damages that can be awarded to a consumer, and require each professional to have insurance or other assets available to meet any damages awarded at or below that limit. Learn more about limited liability.

In addition, the associations responsible for the professional you deal with must prove that they expect and enforce high standards from their members before their Professional Standards Scheme is approved. This reduces the risk of things going wrong in the first place.

What we expect associations to do

Associations must demonstrate that the people they are representing form a genuine professional community that can protect consumers and manage risk.

We assess this by requiring associations to complete an intensive application process, in which they must be able to prove that their association has the capacity to regulate its members and protect consumers in certain key areas before their Professional Standards Scheme is approved.

Once an association’s scheme has been approved, it must meet ongoing compliance and professional standards improvement requirements. This includes the submission of detailed reports to us every year, which are tabled and discussed in parliament.

If associations don’t submit these reports – or if they fail to meet their scheme requirements – the Professional Standards Councils can issue warnings, seek fines and other remedies through the courts, or consider revoking the association’s scheme.