ASIC has amended licensees’ obligations under the reportable situations regime.
The regulator says licensees no longer have to report certain breaches of the misleading and deceptive conduct provisions, and the false and misleading representations provision, under the regime.
ASIC has made ASIC Corporations and Credit (Amendment) Instrument 2023/589 “…which modifies the reportable situations regime so that licensees do not have to submit notifications about certain reportable situations from 20 October 2023.”
The commission explains that under the reportable situations regime, 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’.”
It says these are specified in sections of the Corporations Act 2001 and the National Consumer Credit Protection Act 2009.
ASIC notes the Instrument modifies this requirement to exclude certain breaches of the misleading or deceptive conduct provisions, in subsections of the Corporations Act or the ASIC Act and the false or misleading misrepresentations provision in the ASIC Act “…from being deemed significant breaches of a core obligation and therefore automatically reportable.”
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, [then] 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)
- Not give rise, and be unlikely to give rise, to any other reportable situation
An example of such a breach in the explanatory statement on the instrument, regards a Statement of Advice.
It says: “A Statement of Advice given to a client contains an error that the adviser rectifies with the client promptly and involves no actual or expected financial loss to the client i.e. is not an error that, if the correct information was provided, could have influenced the client’s decision.”
ASIC also notes that from 20 October 2023, licensees also have up to 90 days (from 30 days) “.. to report a reportable situation that has underlying circumstances that are the same, or substantially similar, to an earlier reportable situation.”
