ASIC announces approach with multiple October reforms

AFA News 19 August 2021. On Thursday 12 August 2021, ASIC issued a media release setting out their ‘approach to new laws reforming the financial services sector’.  This media release was ASIC’s way of acknowledging the overwhelming volume of change that is confronting the financial services sector and their commitment to work cooperatively with the broader industry.

Whilst this was not described as a facilitative compliance approach, which they have employed in the past, including at the commencement of FoFA, it does demonstrate a similar approach, however, it is dependent upon licensees and advisers making a reasonable attempt to implement the reforms.

ASIC specifically referred to the following key reforms that are most relevant to financial advice and start in October:

  • 1 October 2021 – Reference checking and information-sharing requirements.
  • 1 October 2021 – Breach reporting and the notify, investigate and remediate’ obligation
  • 5 October 2021 – Design and distribution obligations
  • 5 October 2021 – Internal Dispute Resolution

On top of these reforms, financial advisers are also subject to the second phase of the APRA Intervention in the IDII market and the product changes that will happen as a result.

In the media release ASIC’s new Chairman Joe Longo made the following points:

“While these reforms have been in the pipeline for some time, ASIC recognises they require significant changes to businesses’ systems and processes and take effect at the same time industry is facing other challenges, including from COVID-19 and renewed lockdowns.

We, therefore, recognise there will be a period of transition as the industry finalises the implementation of additional compliance measures, and ASIC will take a reasonable approach in the early stages of these reforms provided industry participants are using their best efforts to comply.

In adopting this approach, ASIC will take into account the context that firms are operating in. This includes the scale of the changes, the challenges arising from the current operating environment and noting industry will receive the final guidance on two measures relatively close to the start date.”

We welcome this message from ASIC and we will certainly be doing what we can to assist our members to understand what their obligations are during this intense period of reform.

Issued 19.08.2021. AFA Policy & Education Update