Will ‘dobbing in’ put licensees at risk?
The ‘dobbing in’ provision as part of the breach reporting regime means licensees are required to report breaches of other licensees, but as long as it is done in good faith no action will be taken against them, according to financial services law firm Holley Nethercote.
The breach reporting regime would begin on 1 October and reporting another licensee would not be done anonymously as the breach had to be reported to the accused licensee and the Australian Securities and Investments Commission (ASIC).
Jesse Vermiglio, partner at Holley Nethercote, said the regulatory guide outlined the ‘qualified privilege’ afforded to those making a report.
“The reason why it is not anonymous relates to the protections that are afforded to the people who are actually doing the ‘dobbing in’,” Vermiglio said.
“There is a qualified privilege for those people who are dobbing in other advisers or mortgage brokers.
“As long as the reporting is done is good faith then there can’t be any action taken against them from either the licensee or the person they’re dobbing in.”
The provision ran the risk of creating tension between relationships and now the industry was required to police itself.
“There are distribution channels, licensees that have relationships with other licensees, advisers having relationships with advisers, that’s just the nature of working in an industry,” Vermiglio said.
“But this is a legal requirement; it’s important that licensees have established processes to make sure that if they become aware of information about a breach, there’s a requirement that reporting occurs.”
However, Vermiglio said it would only be the “really egregious” breaches that the regulator would be interested in.
“It’s somewhat striking this feature in the regime because in our legal culture because dobbing in, whether yourself or someone else is pretty foreign us,” Vermiglio said.
“Licensees are going to want to ensure they have reasonable grounds and the facts that determine whether dobbing in exist or not.”
However, the new regime took the subjectivity away from advisers and licensees to report any breach and would leave it to the regulator to decide on action.
“These reforms are quite significant and it removes a lot of subjectivity that’s associated with self-assessing reportable situation or breaches,” Vermiglio said.
“One of the features of the existing regime that’s about to be replaced is not only to you need to have a breach, but you need to consider whether that breach is significant.
“That subjectivity is being removed and all you really need to identify is whether there has been a breach of certain provisions.”
AUTHOR
Chris Dastoor
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