Advice breaches decline but ASIC concerned at industry inaction
ASIC has indicated its disappointment at “little improvement” being made on the reportable situation regime.
Over 16,000 reports were made to ASIC under the regime according to its FY22-23 annual report but almost three-quarters of these (71 per cent) were submitted by 21 licensees.
Some 88 per cent of these Australian financial service licensees (AFSLs) who reported a breach had over $1 billion or more in reported revenue but ASIC stressed licensees of all sizes should be following the regime.
Since 1 October 2021, AFSLs and Australian credit licensees are required to submit notifications about reportable situations (previously breach reports) to ASIC via the ASIC Regulatory Portal.
It warned the proportion of the total licensee population who are reporting breaches remains very low at just 11 per cent which ASIC said is “lower than expected” and licensees are taking too long to identify and investigate breaches with some taking over a year.
There were also delays to compensating affected consumers with 8 per cent taking over a year to finalise completion.
The number of breaches affecting financial advice declined from 10 per cent last to 7 per cent this year while the number that stated advice was the issue declined from 6 per cent to 5 per cent.
The most common cause of a breach was staff negligence or error and ASIC said it is concerned licensees may be failing to identify the underlying root causes of breaches which is important to help them put in place preventative measures.
In light of this, the corporate regulator said it has commenced surveillance activity to target licensee who may not be meeting their obligations or reporting less than expected in terms of nature, scale and complexity of the breach.
ASIC chair, Joe Longo, said: “‘The reportable situations regime has now been in place for over two years, and licensees have had ample time to take the necessary steps to ensure full compliance with the requirements,’ said ASIC chair Joe Longo.
“Since its commencement, ASIC has been working with stakeholders to improve the operation of the reportable situations regime, including through providing guidance and modifications. ASIC will now move to taking stronger regulatory action to drive improved compliance with the regime, including enforcement action where appropriate.”
AUTHOR
Laura Dew
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
report too much = bad.
report too little = bad.
advisers = just bad people.
So here is ASIC being so brave picking on smaller licensees: "In light of this, the corporate regulator said it has commenced surveillance activity to target licensee who may not be meeting their obligations or reporting less than expected in terms of nature, scale and complexity of the breach".
Yet on the same day, Industry Funds found to be taking up to 2 years to process death claims! At yet, ASIC does nothing.
ASIC asleep at the wheel - again.
Spot on tinman. Pick on Advisers' is an ongoing plaything for ASIC, yet Industry Funds is carte blanche on their watch.
How interesting. Maybe if the reputation of ASIC was seen as a negative and that they were considered an education and assistance body, rather then 'taking people's livelihoods off them', then perhaps people would be open to provide them the information they require to document the issues at hand. ASIC are not listening, and neither is the government.