Clarity needed on civil penalty exemptions for breach reporting
The corporate watchdog needs to clarify which civil penalty provisions will be exempt from the new breach reporting requirements, according to the Association of Financial Advisers (AFA).
AFA chief executive, Phil Anderson, said there were just over three months until the new breach reporting regime came into play and that the exemption was the big variable at the moment.
“The Government has the ability to exempt certain civil penalty provisions from being reportable. Because the definition comes back to: is it a core obligation and is it significant?
“’Significant’ is assessed based on whether it is an offence above a maximum penalty of three months or more for dishonesty, or 12 months for other reasons, or it’s a civil penalty provision. But there is room for civil penalty provisions to be excluded via regulation as an exemption.
“That’s the bit that is to be finalised – what civil penalty provisions will be exempted from being caught under the breach reporting requirements?”
Anderson said he wanted to see breach reporting remain focused on significant breaches and that it should not pick up minor and administrative issues.
“Part of the complication is that a lot of the breaches of best interest duty at the moment are minor and administrative,” he said.
“For example, failing to adequately document the actions they’ve taken with respect to meeting one of the safe harbour steps. That seemingly could end up being reportable. So, it’s about making sure those minor administrative matters, whether it is breach reporting of financial disclosure statements don’t become reportable.”
While ASIC had published draft guidance on the regime, Anderson said it was incredibly complex and that it would be difficult for small licensees to understand what was reportable and what was not reportable.
“It will lead to a significant increase to what needs to be reported and there will be a cost that goes with that,” he said.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
