ASIC identifies poor reportable situations compliance by AFSLs
AFSLs are being urged by ASIC to monitor and improve their compliance with the reportable situations regime after identifying “poor practice” by licensees in a recent review.
The reportable situations regime requires licensees to identify, fix and report their problems to the regulator to life industry standards and improve consumer outcomes. It also helps ASIC to identify any emerging systemic issues.
The corporate regulator reviewed 14 licensees of various sizes who had either low number of reports or had not reported at all between October 2021-June 2024.
“ASIC expects all licensees, regardless of size, to have robust systems and processes in place to ensure timely detection and reporting of non-compliance,” it said.
The review found:
- Licensees were generally slow to report to ASIC. The key driver of these delays was that licensees took a long time to identify breaches in the first place and begin investigating.
- When ASIC reviewed why this was happening, ASIC found that there were deficiencies in licensees’ incident management, particularly how they identified, escalated and recorded incidents.
- Most licensees had gaps in how they monitored their own compliance with the regime.
- These poor practices had real impacts on consumers. The failures to promptly identify breaches meant that licensees were very slow to rectify breaches and remediate customers.
Almost a third of reported breaches took more than one year to be identified and the average time taken to complete an investigation was 39 days. The average time to report a breach to ASIC was 534 days and the average time to finalise compensation to consumers was 632 days.
In the worst case identified, it took over 12 years for a licensee to commence an investigation into a breach, ASIC said.
The regulator shared four questions that licensees should consider when it comes to their reporting.
These were:
- Are you identifying incidents and breaches?
- Are you escalating and investigating incidents and breaches comprehensively and in a timely way?
- Do you capture important information about incidents and breaches in a single register?
- Have you got the necessary arrangements in place to monitor your compliance with the regime?
Kate O’Rourke, ASIC commissioner, said: “We have undertaken extensive work to strengthen the operation of the reportable situations regime since the introduction of the October 2021 reforms, and ensuring that the objectives of the regime are met remains a priority area of work for us in 2024-25.
“As part of this, we will consult with stakeholders on options for future granular reporting to provide even deeper insights, ahead of our fourth annual publication of reportable situations data in Q3 2025.”
AUTHOR
Laura Dew
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