Good News for AFS Licensees: ASIC Eases Breach Reporting Rules

<p>If you hold
an Australian Financial Services (AFS) license, we have good news for you. The
national market watchdog has just informed that you will not have to notify it
about all regulation breaches. If they didn't cause financial harm to the
client and were quickly rectified, the obligation to inform about such a
situation has just been lifted.</p><p>ASIC Eases Rules on
Reportable Situations Regime</p><p>In a recent
development, the Australian Securities and Investments Commission (<a href="https://www.financemagnates.com/tag/asic/" target="_blank" rel="follow">ASIC</a>) has
revised the <a href="https://www.financemagnates.com/terms/o/obligations/">obligations</a> of licensees under its reportable situations regime. A
notable change is the relaxation of the mandate for reporting specific breaches
related to misleading and deceptive conduct provisions and the false and
misleading representations provision under the established framework.</p><p>What does
this mean in practice? Among other things, if a licensed entity commits a
regulation breach that concerns a single client, didn't cause financial damage, and is quickly fixed, they don't have to report this situation to ASIC.</p><p>"An
example of such a breach is a staff member incorrectly advising a customer
about the amount of daily external transfer that they are permitted to make
during a phone call and correcting the error on the same call in circumstances
where there is no actual or anticipated financial loss to the consumer," ASIC
explained in the official press release.</p><blockquote><p lang="en" dir="ltr"><a href="https://twitter.com/asicmedia?ref_src=twsrc%5Etfw">@asicmedia</a> <a href="https://twitter.com/hashtag/ASIC?src=hash&amp;ref_src=twsrc%5Etfw">#ASIC</a> new rule: If a regulation breach didn't harm the client, there's no need to report it. <a href="https://twitter.com/hashtag/Australia?src=hash&amp;ref_src=twsrc%5Etfw">#Australia</a> <a href="https://twitter.com/hashtag/AFS?src=hash&amp;ref_src=twsrc%5Etfw">#AFS</a> <a href="https://t.co/E7NQKRoq4O">pic.twitter.com/E7NQKRoq4O</a></p>— Damian Chmiel (@ChmielDk) <a href="https://twitter.com/ChmielDk/status/1714921196469252105?ref_src=twsrc%5Etfw">October 19, 2023</a></blockquote><p>On top of
that, licensees now have 90 days instead of 30 to report a situation to ASIC
from the time they learn about it, especially if it's similar to something
they've reported before.</p><p>This
alteration comes as a part of the ASIC Corporations and Credit (Amendment)
Instrument 2023/589, which has been vital in modifying the reportable
situations framework. Consequently, from 20 October 2023, licensees are exempt
from submitting notifications regarding certain reportable situations.</p><p>From July
2022 to June 2023, <a href="https://www.financemagnates.com/forex/asic-grants-332-australia-financial-services-license-in-fy23/" target="_blank" rel="follow">the Aussie regulator has approved 332 new AFS licenses</a>. The
current number of AFS authorization holders exceeds 5,000.</p><p>Recent Regulatory Updates</p><p>In a recent
development, the Australian government has floated a proposal <a href="https://www.financemagnates.com/cryptocurrency/australia-proposes-tghter-crypto-rules-mandatory-licenses-and-reviews/" target="_blank" rel="follow">to regulate
cryptocurrency trading platforms more stringently</a>, aiming to bring them under
the umbrella of local financial regulatory authorities. The proposal, unveiled
in October 2023, stipulates that Australian cryptocurrency exchanges should
acquire a license from the pertinent financial services regulator to operate
legally. </p><p>Earlier in
September 2023, <a href="https://www.financemagnates.com/terms/a/asic/">ASIC</a> spotlighted specific inadequacies in the existing design
and distribution obligations concerning the distribution of
over-the-counter derivatives and other high-risk retail products. <a href="https://www.financemagnates.com/forex/obligations-for-cfds-brokers-asic-seeks-to-tighten-ddo-rules-further/" target="_blank" rel="follow">This category includes</a> contracts for differences and
cryptocurrency derivatives. </p><p>The
narrative of heightened financial regulation <a href="https://www.financemagnates.com/forex/asic-eyes-ai-new-plan-to-shield-australians-from-financial-scams/" target="_blank" rel="follow">was also seen in August 2023</a> when ASIC disclosed its intent to bolster enforcement activities, with a
particular focus on shielding consumers and small enterprises. This move is a
response to the escalating incidence of digital scams, misconduct enabled by
technology, and predatory lending practices prevalent in the Australian
financial landscape.</p>

This article was written by Damian Chmiel at www.financemagnates.com.