ASIC has extended the transitional compensation arrangements applying under s 912B of the Corporations Act 2001 from 30 June 2006 to 31 December 2006.[CO 06/495]

Section 912B of the Corporations Act requires an Australian financial services licensee who provides financial services to retail clients to have in place arrangements to compensate those persons for loss or damage suffered because of breaches of obligations under Chapter 7 of the Corporations Act.

The Government is still considering what measures are needed to assist with implementation of s912B.

The current transitional arrangements are:

• professional indemnity insurance requirements continue to apply to most responsible entities of managed investment schemes;
• dealers and advisers in investment products remain subject to security deposit requirements;
• insurance brokers remain subject to the professional indemnity insurance requirements that applied under the superseded Insurance (Agents and Brokers) Act 1984; and
• market operators continue to maintain fidelity fund style compensation arrangements (and ASX continues to operate the National Guarantee Fund).