The Australian Securities and Investments Commission (ASIC) has released its draft regulatory guide on upcoming breach reporting reforms under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020.
Set to commence on October 01, the reforms aim to clarify and strengthen AFS licensees' existing obligation to self-report certain breaches of the law to ASIC, while also and extending the obligation to credit licensees. These reforms flow from the Financial Services Royal Commission and findings from the ASIC Enforcement Review Taskforce.
“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,” said ASIC Deputy Chair Karen Chester.
“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 the industry.”
ASIC is now seeking industry feedback until June 03, 2021. It 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. However, it clarified that 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.
The regulator is also seeking industry 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. It is open for feedback until June 03, 2021.
ASIC will publish the final guidance before the obligations commence on October 01, 2021.