Changes ahead for AFSLs’ breach reporting
ASIC has updated its reportable situations regime to remove the need for licensees to submit breach notifications for certain breaches.
Under the current regime, Australian financial services licensees (AFSLs) are automatically required to submit notifications to ASIC about those reportable situations which are deemed to be ‘significant’.
Changes from 20 October see that requirement modified to exclude certain breaches of the misleading or deceptive conduct provisions in subsection 1041H(1) of the Corporations Act or subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the false or misleading misrepresentations provision in s12DB(1) of the ASIC Act from being deemed significant breaches of a core obligation and therefore automatically reportable.
To qualify for the exclusions, the relevant breach must:
- Only impact one person or, if it relates to a financial product, credit product, consumer lease, mortgage or guarantee that is, or is proposed to be, held jointly by more than one person, those persons;
- Not result in, and be unlikely to result in, any financial loss or damage to any person (regardless of whether that loss or damage has been, will be or may be, remediated); and
- Not give rise, and be unlikely to give rise, to any other reportable situation.
ASIC gave the example of a breach where a staff member incorrectly advised a customer about the amount of daily external transfer that they are permitted to make during a phone call and correcting the error on the same call in circumstances where there is no actual or anticipated financial loss to the consumer.
A second change effective from 20 October will increase the time period given for AFSLs to report a breach if it is similar or the same to a breach that has already been reported.
AFSLs will now be given 90 days, up from 30 days, from when they first know there are reasonable grounds to believe that a reportable situation, to lodge a report with ASIC, if the situation has underlying circumstances that are same or similar to a situation that has already been previously reported.
AUTHOR
Laura Dew
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