Will ASIC's adviser breach regime overwhelm its own resources?

Financial advice licensees are unlikely to take any risks with the Australian Securities and Investments Commission’s (ASIC’s) new breach reporting regime meaning almost everything will be reported so that the regulator is at risk of finding itself inundated by the resultant flood of breach reports.

With financial advice companies awaiting the fine detail of the new breach reporting regulatory arrangements, a specialist financial services lawyer is warning that the advice industry is facing a huge change in which previously minor breaches will warrant reporting and prudent licensees are likely to do so.

While some financial advice executives yesterday told Money Management the new breach reporting regime was “impractical” and risked “driving some behaviours underground”, director with specialist financial services law firm, The Fold, Simon Carrodus said he wondered whether ASIC itself would be sufficiently resourced to handle the flood of breach reports which would be generated by the new regime which starts in October.

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“What we’re going to see is some minor and very technical issues being compulsorily reported as a breach resulting in a significant increase in the number of reports being handled by ASIC,” he said.

“We will have to wait and see how that plays out,” he said but noted that the regulator had been legislatively enabled to adjust the regulatory settings.

The Association of Financial Advisers (AFA) has expressed concern at the practical impact of the breach reporting regime changes but expressed the hope that ASIC may yet see the sense of taking a moderate regulatory approach.

In a communication to members, the AFA noted that the threshold for reporting breaches to ASIC had been substantially reduced as a result of Royal Commission recommendations, and this would lead to a significant increase in reportable breaches.

“The Government are still working on a regulation that will hopefully reduce the range of matters that are reportable, and ASIC will provide further guidance in due course,” the communication said.

AFA general manager, policy and professionalism, Phil Anderson said it was a question of how the regulations played out and therefore what would ultimately have to be reported as a breach.

The breach reporting regime flagged as a result of the Government’s legislative amendments empowering ASIC steps substantially beyond what was recommended by the Treasury’s 2017 ASIC Enforcement Review which called for the clarification of the regime “to ensure that the significance of breaches is determined objectively”.

One element of the new regime is that licensees will have a new obligation to report breaches by advisers of other licensees creating not only a challenge for advisers and their licensees but for the licensees of external planning practices.




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ASIC will always find resources to persecute licensed advisers. They will just increase their "cost recovery" fees, and divert more resources away from real consumer protection. Dodgy, unregulated advice will proliferate even further.

I can just see the breach reporting now: -
Client signed in the wrong spot - report breach of misleading client
Client though FDS was a bill - report breach of possible misleading client and informed consent
Adviser had a sick day - report breach of possible fee for no service
Audit result - files in wrong colour - report breach

It goes on and on. Not much hope of adviser ever being able to move ASFLs due to reference checking - looks bad for adviser to have so many breaches?
Adviser is eventually banned.

Alternatively, unlicensed advise given - no need to report.

Anyone see a problem here?

Melissa Caddick didn't see a problem with excessive regulation of licensed advice and wilful neglect of unlicensed advice.

She saw an opportunity. As will many others.

Probably. ASIC may create a few jobs for middle-aged financial planners who have left the industry in recent times.

No other government agency has the same "image problem" as ASIC. MIA Jane is still trying to work out why she is being told by ASIC that everything is fine and personal tax advice is acceptable, while the rest of the world is wondering why Melissa Caddick appears to have operated for a decade while ASIC slept.

The only breach required is ASIC to report itself.
ASIC are Totally Corrupt.
ASIC are Totally Anti Real World Advisers
ASIC's ever increasing BS REGS must be stopped.
ASIC somehow have no idea it is all caused by ASIC.
There's your breach report ASIC - IT'S YOU !!!!!!!!!!!!!!

So the ASIC Supervisory Levy increases to reflect ASIC's alleged supervisory costs, but it is these same costs that are increasing as a result of ASIC's own approach to "supervising" the industry. i.e. ASIC themselves are responsible for their own expenses, which they submit to Treasury, get the "tick" to proceed and then the cycle repeats itself the next time. Isn't this a prime example of "conflicted remuneration"?

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