Corporations Amendment Regulations 2007 (No. 6) have been made to complement section 912B of the Corporations Act 2001 (the Act) and will operate from 1 July 2007.

Under section 912B, Australian financial services licensees
(licensees) providing a financial service to retail clients must have
arrangements for compensating them in the event of monetary losses
suffered due to breaches of relevant obligations under the law. This
may include providing inappropriate advice, or false or misleading
conduct.

The new regulations provide that section 912B is satisfied if
licensees have adequate professional indemnity insurance in place. Existing licensees as at 31 December 2007 have until 1 July 2008 to put their insurance in place. New licensees after 1 January 2008 must comply immediately on commencement of their licence. The regulations also deal with the
return of the security bonds to licensees by the Australian Securities
and Investments Commission (ASIC) and disclosing compensation arrangements in Financial Services Guides.

The foolowing AFS licensees are exempt from the insurance requirement:

(i) a general insurance company regulated by APRA under the Insurance Act 1973;
(ii) a life insurance company regulated by APRA under the Life Insurance Act 1995;
(iii) an authorised deposit-taking institution regulated by APRA under the Banking Act 1959.