ASIC amends financial services and credit breach reportable situations

ASIC has made ASIC Corporations and Credit (Amendment) Instrument 2023/589, which modifies the breach reportable situations regime so that Australian financial services licensees and credit licensees do not have to submit notifications about “insignificant contraventions of core obligations” from 20 October 2023. This follows concerns about the costs of reporting some reportable situations that have limited regulatory benefit.

The amendment also changes the reporting period for additional reportable situations with underlying circumstances that are the same as, or substantially similar to, the underlying circumstances of a previous reportable situation.

Under the reportable situations regime, Australian financial services (AFS) licensees and Australian credit licensees are automatically required to submit notifications to ASIC about some reportable situations, which include deemed ‘significant’ breaches of ‘core obligations’ specified in section 912D of the Corporations Act 2001 (Corporations Act) and section 50A of the National Consumer Credit Protection Act 2009.

Insignificant contraventions of core obligations

The Instrument modifies the reporting requirement to exclude automatic reporting of insignificant contraventions of core obligations which are certain breaches of the misleading or deceptive conduct provisions in subsection 1041H(1) of the Corporations Act or subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the false or misleading misrepresentations provision in s12DB(1) of the ASIC Act.

To qualify for the exclusions, the relevant breach must:

  • only impact one person or, if it relates to a financial product, credit product, consumer lease, mortgage or guarantee that is, or is proposed to be, held jointly by more than one person, those persons;
  • not result in, and be unlikely to result in, any financial loss or damage to any person (regardless of whether that loss or damage has been, will be or may be, remediated); and
  • not give rise, and be unlikely to give rise, to any other reportable situation.

An example of such a breach is a staff member incorrectly advising a customer about the amount of daily external transfer that they are permitted to make during a phone call and correcting the error on the same call in circumstances where there is no actual or anticipated financial loss to the consumer. 

Reporting period for additional reportable situations

Licensees also now have up to 90 days (increased from 30 days) to report a reportable situation that has underlying circumstances that are the same or substantially similar to an earlier reportable situation.

Core obligations in the financial services law

The Instrument also modifies subsection 912D(3) of the Corporations Act to reflect the amended paragraphs of the ‘financial services law’ definition that the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 inserts.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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