ASIC today released regulatory guidance to help credit and Australian Financial Services (AFS) licensees to meet new breach reporting obligations.
Set to commence on 1 October 2021, the breach reporting reforms address long-standing concerns about breach reporting by making the reporting consistent, clearer and timely across the industry.
ASIC Deputy Chair Karen Chester said, 'The new reporting obligations address long held concerns on the quality and timeliness of breach reporting. ASIC analysis in 2018 revealed it took more than 4 years (on average) for large financial institutions to identify incidents that proved to be significant breaches. Today's remediation tally reveals how much consumer harm these delays caused, and ultimately at great cost to those firms.'
The breach reporting reforms were made law in December 2020, some 9 months before commencement. They flow from the Financial Services Royal Commission and findings of Treasury's Enforcement Review Taskforce.
Compliance breaches happen in all businesses. Breach reporting is integral for Board oversight and risk management by licensees. It is also needed for ASIC's system wide regulatory oversight.
'The Government's new reporting obligations put strong guard rails in place that will benefit firms and consumers alike', said Ms Chester.
'The new obligations will help firms identify and act swiftly on the breaches that matter, making sure they get the attention they deserve. Licensees and boards will have greater confidence they are doing the right thing by consumers, and ultimately their firm and shareholders.
'The new obligations also benefit consumers by allowing ASIC to better identify and swiftly address systemic problems. There will be greater transparency for consumers and firms with the publication of breach reporting data by ASIC from late 2022', said Deputy Chair Karen Chester.
ASIC's guidance was greatly enhanced by the constructive submissions and valuable insights received from industry through the consultation.
'Industry feedback meant we can now accommodate batch uploading of reports where they derive from a single root cause. This will significantly reduce the reporting burden for licensees', said Ms Chester.
ASIC has also responded to industry feedback by incorporating some 15 more working examples in the guidance.
AFS licensees will have to report breaches that they discover after 1 October 2021, even if the breach occurred before that date. However, credit licensees do not have to report breaches that occurred before 1 October even when identified after 1 October 2021. As a result, credit licensees will have a relatively gradual implementation upon commencement.
ASIC today also published INFO 259 which sets out actions that must be taken by licensees to notify affected customers of a breach of the law, investigate the breach and remediate impacted customers. This implements a new obligation that applies to licensees of financial advisers and mortgage brokers in certain situations.
Consistent with ASIC's recent statement, we will take a reasonable approach in the initial stages of these new obligations provided industry participants are using their best efforts to comply (21-213MR).
