ASIC consultation on draft guidance on breach reporting reforms

ASIC has issued Consultation Paper 340, seeking stakeholder feedback on proposed updates to its draft guidance on upcoming breach reporting reforms

Written on 28 April, 2021
Tanaya Das

The Australian Securities and Investments Commission (ASIC) has issued Consultation Paper 340, seeking stakeholder feedback on proposed updates to its draft guidance on upcoming breach reporting reforms.

Announcing the consultation, ASIC Deputy Chair Karen Chester said, “We support the reform goals to promote consistent, timely and high-quality reports. 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.”

The National Insurance Brokers Association (NIBA) CEO, Dallas Booth said, “We will carefully review the consultation paper and will make a submission to ASIC in due course on behalf of our members.”

ASIC’s draft regulatory guide reflects reforms made to the breach reporting regime under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020. Set to commence on 1 October 2021, these reforms clarify and strengthen the existing obligation on AFS licensees to self-report certain breaches of the law to ASIC and extend the obligation to credit licensees.

The corporate regulator expects a significant increase in the volume of reports received as a wider range of entities will be required to report and a wider range of breaches will be subject to reporting. Entities are not required to report every instance of non-compliance or trivial breaches, but a targeted set of ‘reportable situations’ defined under the law.

ASIC is also seeking feedback on a draft information sheet on the new notify, investigate and remediate obligations set to apply to AFS licensees who are financial advisers and credit licensees who are mortgage brokers.

Stakeholders have been invited to comment on the draft guidance and information sheet by 3 June 2021 and ASIC will publish final guidance before the obligations commence on 1 October 2021.