ASIC will extend the relief and requirements regarding reportable situations regime for another five years until October 2029.
The reliefs are due to expire next month, but ASIC said they are “operating efficiently and effectively, and continue to form a necessary and useful part of the legislative framework”.
It had previously announced its intention to extend this in a proposal in early September and said it received six responses to a public consultation.
Four of these submissions advocated for wider relief from the reportable situations regime and two advocated for migration of the relief and/or requirements to the primary law.
Regarding the former, ASIC will determine if wider relief is appropriate and, if necessary, seek feedback on the proposal. In the case of the second matter, ASIC said it has drawn this feedback to the attention of the Commonwealth Treasury.
The relief in ASIC instruments ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716 and ASIC Credit (Breach Reporting—Prescribed Commonwealth Legislation) Instrument 2021/801 have been consolidated into one instrument.
However, in its submission to the consultation, the Financial Advice Association Australia (FAAA) said the obligations have caused a significant burden and cost on firms.
“While the FAAA supports the importance of appropriate record keeping, this needs to be based upon a sensible consideration of the costs of record keeping. In the context of the current focus on the cost of financial advice, we believe that it is appropriate for this to be subject to further careful deliberation,” Phil Anderson, general manager for policy, advocacy and standards at the FAAA, said.
Regarding Class Order CO 14/923 Record-keeping obligations for Australian Financial Services licensees (AFSLs) when giving personal advice, it said: “The FAAA have for a long time advocated for greater regulatory capacity for financial advisers to rely upon their professional judgement, rather than the type of prescriptive record keeping obligations that are set out in this Class Order.
“We suggest Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice, in its current form, is not a useful part of the legislative framework and should not be extended, other than as a short-term measure in a modified and simplified form.”
Regarding the other two aforementioned pieces, it said these are “excessively broad”.
“Our opening position is that the current breach reporting regime is excessively broad and is capturing matters that are not worthy of being self-reported to ASIC or consuming ASIC’s focus and time.”
According to ASIC’s FY2022–23 annual report released last October, over 16,000 reports were made to ASIC under the reportable situations regime but almost three-quarters of these (71 per cent) were submitted by 21 licensees.
Some 88 per cent of these AFSLs who reported a breach had over $1 billion or more in reported revenue.
