ASIC eases reporting requirements for AFS licensees

Rick Steves

ASIC excluded certain breaches related to misleading or deceptive conduct and false or misleading representations from being automatically reportable as significant breaches. In addition, AFS licensees now have up to 90 days, up from the original 30 days, to report a situation similar to one previously filed with the regulator.

The Australian Securities and Investments Commission (ASIC) has amended obligations under the reportable situations regime for Australian Financial Services (AFS) licensees and Australian credit licensees.

The changes, encapsulated in the ASIC Corporations and Credit (Amendment) Instrument 2023/589, are slated to come into effect from October 20, 2023.

ASIC narrows scope of what constitutes a reportable breach and gives more time

Under the existing reportable situations framework, licensees are required to notify ASIC about what are deemed ‘significant’ breaches of ‘core obligations.’ These core obligations are specified under section 912D of the Corporations Act 2001 and section 50A of the National Consumer Credit Protection Act 2009.

The amendment modifies this requirement by excluding certain breaches related to misleading or deceptive conduct and false or misleading representations from being automatically reportable as significant breaches. To qualify for these exclusions, the breach must satisfy specific conditions, including a limited impact on only one person or jointly held financial or credit products, no likelihood of resulting in financial loss, and not giving rise to any other reportable situation.

Another notable change is the extension of the time limit for reporting a situation that has the same or similar underlying circumstances as a previously reported situation. Licensees now have up to 90 days, up from the original 30 days, to file such a report with ASIC.

These amendments come as part of an ongoing effort to streamline regulatory compliance while ensuring consumer protection and market integrity. By narrowing the scope of what constitutes a reportable breach, ASIC aims to focus its supervisory efforts on more severe infringements that have broader implications for market participants.

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