Breach Reporting – ASIC consults but industry still on the hook

The Breach Reporting obligations, introduced as part of the 2021 Red October reforms, are not going away.

“ASIC remains committed to the successful implementation of this regime and we have developed a comprehensive plan of work to ensure that it meets its objectives for ASIC, industry and consumers.”

At Fourth Line, we have reviewed over 8000 SOAs and supporting advice creation documents, and it is clearly apparent that many licensees may have an obligation to notify ASIC of “reportable situations” based on the likelihood that some Advisers are breaching sections of the Corporations Act which carry civil penalty provisions – namely the financial advice “Conduct and Disclosure Obligations” found under s 961B, G, H, and J. These are referred to in the Breach Reporting legislation as “deemed significant breaches”.

I would argue many licensees are still “blind” as to being able to determine if advisers in their network are responsible for any such breaches. Many licensees lack oversight, in real time, of the advice process their advisers are following and the quality of the information presented to the client in the SOA.

IMPORTANT REMINDER

Many “deemed significant breaches” are created at the point the SOA is presented to the client. If licensees are proactive and review the SOA (and advice process followed) before the advice is presented to the client (aka prevetting), then almost all such potential breaches could be prevented.

Ultimately, ASIC may be “naming and shaming” licensees by publishing information about the nature or number of reports lodged by specific licensees.

See original article at HERE

For further detailed information from ASIC, go to the ASIC website HERE

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Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs. 

For information email: info@fourth-line.com.au