Regulatory investment a 'good faith' move
Although the corporate regulator will take a ‘reasonable’ approach towards enforcing the new October regulations, having the right systems in place to show “good faith” towards compliance will help licensees if they get into any trouble, according to Advice Regtech.
The Australian Securities and Investments Commission (ASIC) said last week that it would take a “reasonable” approach at the early stage of the October reforms, which included breach reporting.
The corporate regulator was empathetic to the fact it would require significant changes to businesses.
Samantha Clarke, Advice RegTech chief executive and co-founder, said they had been getting approached because it showed advisers had acted in good faith by being pro-active.
“The guidance from ASIC has said as long AFSL’s [Australian financial services licensees] are endeavouring to act in good faith to understand what the relevant reportable situations are,” Clarke said.
“As long as they’ve got the systems and processes and they’re endeavouring to get on top of that by bringing on more systems, they won’t necessarily be more lenient, but they’ll take that into consideration as part of their assessment and judgements.”
In its draft regulatory guide for breach reporting (RG 78), ASIC said: “We consider that having robust breach reporting systems, processes and procedures in place is a key component of a licensee’s compliance and risk management framework”.
This sentiment was echoed at the Financial Services Council (FSC) Life Insurance Summit in April, where ASIC said there would be a focus on the spirit of policy when it comes to defining upcoming compliance regulations.
“The thing that stands out to me is compliance with the spirit of the policy intent, rather than a strict and literal understanding of what requirements are,” Emma Curtis, ASIC senior executive leader – insurers, financial services and wealth group, said.
AUTHOR
Chris Dastoor
Recommended for you
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Australian licensees are expected to make greater use of custom model portfolios for their clients, according to State Street Investment Management, following in the footsteps of US peers.
Adviser Ratings has argued that it’s time for more advisers to utilise digital engagement tools available to them as a disconnect grows between consumers seeking advice from finfluencers and from professionals.
