Post: Reportable situations regime: ASIC modifies licensees’ obligations

ASIC has made ASIC Corporations and Credit (Amendment) Instrument 2023/589, which modifies the reportable situations regime so that licensees do not have to submit notifications about certain reportable situations from 20 October 2023.

Under the reportable situations regime, Australian financial services (AFS) licensees and Australian credit licensees are automatically required to submit notifications to ASIC about some reportable situations, which include deemed ‘significant’ breaches of ‘core obligations’ specified in section 912D of the Corporations Act 2001 (Corporations Act) and section 50A of the National Consumer Credit Protection Act 2009.

The Instrument modifies this requirement to exclude certain breaches of the misleading or deceptive conduct provisions in subsection 1041H(1) of the Corporations Act or subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the false or misleading misrepresentations provision in s12DB(1) of the ASIC Act from being deemed significant breaches of a core obligation and therefore automatically reportable. To qualify for the exclusions, the relevant breach must:

only impact one person or, if it relates to a financial product, credit product, consumer lease, mortgage or guarantee that is, or is proposed to be, held jointly by more than one person, those persons;
not result in, and be unlikely to result in, any financial loss or damage to any person (regardless of whether that loss or damage has been, will be or may be, remediated); and
not give rise, and be unlikely to give rise, to any other reportable situation.
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. For further examples of scenarios in which we consider that the modifications will apply, see the explanatory statement to the Instrument.

From 20 October 2023, licensees also have up to 90 days (from 30 days) from when they first know, or are reckless with respect to whether, there are reasonable grounds to believe that a reportable situation has arisen to lodge a report with ASIC if the situation has underlying circumstances that are the same as, or substantially similar to, underlying circumstances of a reportable situation previously reported to ASIC.

The Instrument also modifies subsection 912D(3) of the Corporations Act to reflect the amended paragraphs of the ‘financial services law’ definition that the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 inserts.

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