ASIC consults on draft guidance on breach reporting reforms

ASIC has issued Consultation Paper 340, seeking stakeholder feedback on proposed updates to its draft guidance on upcoming breach reporting reforms.

ASIC’s draft regulatory guide reflects reforms made to the breach reporting regime under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020. 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.

Set to commence on 1 October 2021, these key Government reforms flow from the Financial Services Royal Commission and findings from the ASIC Enforcement Review Taskforce.

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.’

ASIC 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.

ASIC seeks public comment on the draft guidance and information sheet by 3 June 2021.

ASIC will publish final guidance before the obligations commence on 1 October 2021.

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