AFA News 17 June 2021. In December 2020, the Parliament passed the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 that puts in place a new breach reporting regime, amongst a range of other measures that emanated from the Banking Royal Commission.
The changes to breach reporting are broad and will have a big impact on financial advice, with a substantial increase in the number of matters reported to ASIC expected. The new regime commences on 1 October 2021. The definition of a reportable breach has changed and it has become very prescriptive and complex.
We have been outspoken in our views on this legislation, highlighting that it is so complex, it will be virtually impossible for small licensees to comply. We are also particularly concerned about the impact of an exponential increase in breach reports on the cost of operating an advice licensee.
In April we made a submission to Treasury in response to the consultation on what civil penalty provisions should be exempted from the new regime. Treasury is still working through this, however we do not expect that this will make a huge difference.
ASIC have recently undertaken a consultation exercise on draft new guidance on the new breach reporting regime. The AFA made a submission to ASIC on 7 June 2021, making a number of points, including seeking more clarity on the obligations for a licensee to report financial advisers and mortgage brokers from other licensees.
It is important that licensees are aware of the new breach reporting obligations and the related requirements with respect to investigations, notifying impacted clients and remediation.
Please click here to see the AFA submission to ASIC on the Breach Reporting guidance.
For any questions on Breach Reporting, please email firstname.lastname@example.org.
Issued 17.06.2021. AFA Policy & Education Update