ASIC urges slipshod advisers to own up
The Australian Securities and Investment Commission (ASIC) has released a guide to help Australian Financial Service (AFS) licensees who suspect they may be breaching relevant regulations prepare compulsory breach notification reports.
As well as providing examples of significant breaches of the Financial Services Reform Act, the guide provides instructions on how to report a breach to ASIC, as well as the information that should be included in a breach report.
Under the Financial Services Reform Act, all AFS licensees are required to report significant current and likely breaches of the Act to ASIC.
To determine whether a breach is significant, ASIC said licensees will need to check the impact of the breach on their ability to provide the financial services covered by their license, the potential financial loss to clients arising from the breach and the number and frequency of previous breaches.
ASIC said examples of breaches include having inadequate personal indemnity cover, no monitoring of cash flow projections and having representatives performing tasks not authorized in their license.
“It is important that licensees report significant breaches to ASIC as early as possible, even where the licensee is gathering further information on the breach. There are penalties for not complying with this requirement, so if there is any doubt about whether to report a breach, we recommend that licensees err on the side of caution and report the breach to ASIC,” ASIC executive director of financial services regulation Ian Johnston said.
He said ASIC is continuing to perform random verification visits on AFS licensees to monitor FSR compliance.
Johnston said most of the licensees visited by ASIC have demonstrated a high level of compliance. Where compliance violations have been identified, they have usually been minor and easily addressed by the licensee.
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