“If a complaint is made [by the client] to the adviser, and not the licensee, it may be that that the adviser doesn't escalate it to the licensee and that can be a problem,” said Mr Mennen.

“When a complaint is made, the licensee has an obligation to notify its professional indemnity insurer and it’s the insurer who usually pays the bill if the complaint has merit. Now if the complaint is not made with the AFSL there's a higher risk that it won't be escalated to the insurer.”

Where there’s a delay in making the claim with the professional indemnity insurance provider, they can rely on that delay to deny a claim, warned Mr Mennen.

“A lot of the time we see complaints that are not resolved and it's necessary [for the client] to go to an external dispute resolution body, or through the courts, and sometimes we see that the professional indemnity insurer denies the claim for whatever reason under the policy,” he said.

In some cases the licensee has gone bust which makes claiming any compensation particularly difficult for the client, he said.

“In those circumstances the consumer would need to look at the possibility of pursuing the professional indemnity insurer directly, which is easier said than done, because it’s difficult to even identify who the PI insurer even is, let alone get a copy of the policy and understand what their rights are as a consumer against the insurer,” he said.