ASIC’s Consultation Paper 340 and draft Regulatory Guide 78, released on Wednesday, provide further clarification of what constitutes a reportable situation for licensees under the extended breach reporting obligations, which are a response to a number of recommendations within the royal commission.
According to the regulatory guide, reportable situations include breaches of “core obligations”, such as a licensee’s ability to be financially solvent, breaches of obligations under the Corporations Act, and investigations into possible breaches of these obligations.
They also include additional reportable situations such as conduct constituting gross negligence or serious fraud, and reportable situations that licensees become aware of other AFSLs.
Licensees must lodge a report with ASIC within 30 days when they become aware of the reportable situation, or face potential civil or criminal penalties if they fail to do so.
The regulator said it expected a “significant increase” in the volume of breach reports it would receive as a result of the reforms, which were due to come into force on 1 October, but reiterated that licensees were not required to report “every instance of non-compliance or trivial breaches”.
“We support the reform goals to promote consistent, timely and high-quality reports,” ASIC deputy chair Karen Chester said.
“The Financial Services Royal Commission expressed concern about prolonged and repeated failures by large entities to make breach reports required by the law.
“Breach reporting is a core component of Australia’s financial services and credit regulatory framework. The reforms will better position us to act decisively to disrupt misconduct and escalating harms and identify patterns of non-compliance across industry.”
Comments from industry on the consultation paper are due on 3 June.
ASIC, as usual, only wants adviser heads on poles, not life insurance institutions.
Right now, I know of 3 life insurer AFSLs who appear to be in breach of their AFSL obligations. One is taking 8-10 weeks to quote IP increases, exposing the adviser to liability if the client claims in those weeks; another cannot produce certificates of currency from either its main frame computer or call centre staff, yet ASIC require the CoC to be on file before advice is given; and one is holding up a policy completion, awaiting credit card details for NEXT YEARS ANNUAL PREMIUM, having already been paid for the first year.
On any reasonable test, all three must be in BREACH of Section 912A of the Corporations Act which requires ALL AFSLs to operate in an efficient manner. “ (1) A financial services licensee must: (a) do all things necessary to ensure that the financial services covered by the licencee are provided efficiently, honestly and fairly;”
Have these breaches been reported to ASIC? Do ASIC care about falling service standards in life offices and the impacts for advisers and consumers? Do ASIC care if the adviser may be liable because of the failings of insurers?
[i]”ASIC require the CoC to be on file before advice is given”[/i]
Really? Where can one find a reference to this ASIC requirement? Or is it actually your licensee’s own requirement?
“The regulator said it expected a “significant increase” in the
volume of breach reports.”… this is CODE for “more bonuses for us”. This is what happens when you allow the lunatic lawyers to run the asylum.
Get stuffed ASIC! You’re as conflicted in your role as regulator of the financial services industry here in Australia as the media are in the US these days. You’re not interested in improving this industry, you’re not interested in the mental well being of the people who work in it.
You’re only interest is your your own self worth – you’re own fat greedy pockets that I’m 100% sure are being filled by target levels you’ve set to pin advisers.
On your watch the last 8-10 years we’ve seen massive legislation failures, an insurance industry crumble to where its revenue decreased by $30 Billion last year (that’s [b]30 BILLION[/b][u][/u] dollars!), insurance premiums increase like they’ve never increased before which as a result, has caused never before seen insurance policy lapse rates. Advisers are taking their own lives and small businesses are collapsing everyday – ALL ON YOURS AND THE CURRENT GOVERNMENTS WATCH. Well done. You must be so proud.
You are a massive failure yet all you do is brag about more regulation and pinning another adviser.
Do any of the clowns running ASIC ever think for one moment that its their ludicrous regulations that are actually causing some advisers to behave the way they do now as a result of their pressure to keep their businesses and their families livelihoods afloat???
ASIC is everything and more thats wrong with the future of this industry.
ALL of the advisers I speak to monthly (at least 26) feel exactly the same as this. ASIC is so disgraceful it boggles the mind.
My question is how does the CEO of Telstra get savaged for giving $5k watches as a bonus to others and then the ASIC Chair and Deputy Chair recieve benefits personally ($118k for personal tax advice and $70k for accomdation allowance) they are not entitled to and nothing is really said by ScoMo or Albo?
‘Draconian’ comes from Draco, a ruler in ancient Athens whose laws killed too many people for trivial offences so he was ousted. Our present-day Draco is starting to notice that after the kill-fest of the Royal Commission it is getting a little harder.