The Australian Securities and Investments Commission (ASIC) has delayed the introduction of laws that would compensate investors affected by an HIH or Westpoint-style collapse, saying the Federal Government needs more time to consider its options.

The regulator has issued a new class order that will extend the transitional compensation arrangements under section 912B of the Corporations Act until December 31.

The laws – introduced when the Financial Services Reform Act came into effect in 2001 but not immediately put in place – require Australian financial services licensees who service retail clients to have arrangements to compensate them if the company fails.

It’s not the first time the Government has delayed implementing the law. It initially put the issue on the back burner until the end of this month.

ASIC Executive Director Malcolm Rodgers wasn’t saying much about the delay, but he said the regulator is continuing the transitional arrangements for six months to maintain current minimum compensation requirements while the Government considers its position on a final compensation regime.

Despite the delay, some licensees are subject to compensation arrangements.

Professional indemnity (PI) insurance requirements continue to apply to most responsible entities of managed investment schemes, and financial advisers in investment products are required to have security deposits.

Insurance brokers remain subject to the PI insurance requirements that applied under the superseded Insurance (Agents & Brokers) Act, and market operators continue to maintain compensation arrangements in the style of a fidelity fund.