ASIC breach guidance unlikely to allay licensee concerns

Just days after an Association of Financial Advisers (AFA) submission warned of a compliance tsunami resulting from planned new breach reporting arrangements, the Australian Securities and Investments Commission (ASIC) has released a draft regulatory guide that has done little to allay concerns. 

What is more, the regulatory guide makes clear that financial services licensees will have to be conscious that events which occurred before the new regime even came into force will become reportable. 

The draft guide said that licensees “must report to ASIC all ‘reportable situations’ in : s912DAA of the Corporations Act, s50B of the National Credit Act.”. 

In doing so, the guide specifies that “this term has a specific meaning under the law and includes a range of conduct” 

“In this guide, we refer to four types of reportable situations: 

(a) breaches or ‘likely breaches’ of core obligations that are significant; 

(b) investigations into breaches or likely breaches of core obligations that are significant; 

(c) additional reportable situations; 

and (d) reportable situations about other licensees.” 

In explaining a “reportable likely breach”, the ASIC guide referenced the following example: 

“You may become aware that on a future date your overdraft facility will be closed and you will no longer be able to comply with your base level financial requirements. If you do not have other means of meeting the financial requirements at this time, you will no longer be able to comply with your obligations and must report to ASIC.” 

In its preamble to the guide, ASIC states that “the regulatory regime acknowledges that, despite an expectation of compliance, breaches will occur and licensees then have an obligation to report these to ASIC”.  

“Licensees have a clear role in lifting industry standards as a whole, and part of this is timely identification of their own problems,” it said. 

“We consider that a licensee’s experience with incident and issues management, including breaches, should be a vital source of learning to both reinforce and improve an entity’s compliance framework and overall function. Instances of non-compliance highlight a weakness to be understood, so improvements can be made to prevent the recurrence of the breach in the future.” 




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This is an expansion of the licensee's role as the 3rd disciplinary body, after ASIC and AFCA.

Hume's so called "Single" Disciplinary Body is actually the 4th Disciplinary Body, after the above 3. There cannot be a single disciplinary body until licensees are removed from the system, and financial advisers are removed from ASIC and AFCA control.

Dear ASIC, breaches this week include:
1) adviser farted in meeting and pretended they didn’t, FARSEA breach untrustworthy behaviour. ASIC fine $2,500, AFSL warning to fix Fart procedures within 10 days and report back to ASIC.
2) adviser didn’t smile the whole time in review meeting with client. FARSEA breach unprofessional conduct. ASIC fine $5,000, AFSL requires entires procedures manual reviewed by external consultant and report improvements to ASIC in 30 days.
3) All Advisers and AFSL STRANGLED TO DEARH BY EVER INCREASING BS REGS. Advice Business closed and clients can’t get Advice.
ASIC fine $100,000 clear Fees for No Service as Advisers All Dead. 12 year look back audit ordered by ASIC & AFSL cancelled.
GAME OVER
WELL PLAYED ASIC, FARSEA, AFCA & LNP.
PS - All client directed to contact MPs, ASIC or FARSEA directly for ongoing Advice.
Or use your nearest Robot.

I think you’re missing the most important part - 78.61 licensees MUST report breaches of other licenses.
I like the intent and have often thought a product provider should have an obligation to report poor conduct of advisers if they saw it.. but this guideline says that we all MUST report another licensee and risk fines of up to $1.1million personally or $11mil to the company if we don’t.

I don’t think we’re a society that bankrupts people for failing to report a crime they witness. Should police issue fines to people who see a person j-walk and don’t report it?
I hope that the sensible answer to the above is no.
How such an anti-social concept made it into a consultation paper is a major problem in itself.

Nope just more BS Red Tape and Regs total strangulation.
ASIC now wanting AFSL to be mandatory reporters. We all pay taxes to Govt, plus Advisers and AFSLs massive levies to ASIC. But now they want us to also be their on the street cops.
Along with FARSEA 12, Advisers must monitor other Advisers.
So now AFSLs and Advisers are mandatory reporters to ASIC for any breaches they see, hear, etc.

If you report another AFSL what is the procedure. Does ASIC manage it or do you become responsible for the result and investigation? How does ASIC respond? Do they keep you informed, or do yiu never know if anyone actually did another than file the report in the round file cabinet under the desk?

Obviously, ASIC don't feel like their killing us all off fast enough.... now they want us to help with their task (and end up with a higher ASIC fee into the bargain).

Personally, I think the gene pool of Financial Advisers is too low already, so... "I see nothing... I hear nothing..."

ASIC it appears is completely useless.
https://www.smh.com.au/national/melissa-caddick-s-8m-windfall-after-tip-...
I am starting to wonder if ASIC staff even bother to show up for work - seriously they would not be missed. Apart from banning real Financial Planners and giving themselves pay rises and bonuses (rents, tax returns etc) - what does ASIC do?

Kate McClymont continues to call Melissa Caddick a Financial Planner (2nd paragrath) calls herself an "Investigative Journalist". What is Kate McClymont's problem - she has been told and warned before? Perhaps Kate needs to go back to Uni, then do a course in Ethics and an Exam - because she is clearly not able to do any research.

SMH subsequently edited out the fraudulent claim that Cadddick was a financial adviser, so it doesn't appear online anymore. But yes, the original versions of the article definitely stated that, and I assume the print version did too. Fraudulent claims have become standard practice for dishonest grubs McClymont & Ferguson, as part of their ongoing financial planner vilification campaign.

SMH is widely promoting its 190 year anniversary at the moment. Unfortunately the last 10 of those years have seen a massive decline in standards, as the likes of McClymont & Ferguson drag a once respectable news organisation into the gutter with their lies and misrepresentations. It's not good enough for SMH management to make unacknowledged online edits only once someone complains about the lies. McClymont & Ferguson need to be sacked immediately if SMH hopes to recover any of its lost credibility and make it to 200 years.

Financial Service Providers have their heads in the clouds. The insurance contract act for instance, is drafted on the assumption that consumers will fail to disclose or potentially make frudulent claims. There is no provision for the potential capacity of an insurer to fail to disclose or to defraud a consumer of a genuine claim. On the basis of the Insurance contract Act, where are potential misconduct breaches incorporated into the act and what basis is there to report breaches if the act assumes the Financial Services Provider is of such esteemable character it is beyond the scrutiny of common law. Change the act and regulation will become straightforward and far less costly.

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