11 April 2017
Media Release - #2017034, 2017

ASIC enforcement review consults on breach reporting

The Turnbull Government welcomes the release today of a positions paper on ‘Self-reporting of contraventions by financial services and credit licensees’ by the Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said the Government is committed to ensuring that ASIC has the powers and regulatory tools it needs to proactively address misconduct in the financial services sector, so as to re-build consumer trust and confidence in the financial system.

ASIC’s ability to deal appropriately with misconduct is greatly enhanced by timely reporting by licensees of significant breaches of the financial services laws. The Government included breach reporting in the Terms of Reference for the ASIC Enforcement Review, so that any necessary changes to the reporting regime, to ensure it operates as effectively as possible, could be considered. The proposed reforms will:

  • reduce ambiguity around whether a breach is significant and must be reported to ASIC by introducing an objective ‘reasonableness’ test, making it easier for businesses to make decisions about reporting and strengthening ASIC’s position when it takes enforcement action for failure to report.
  • enhance accountability for licensees, and their employees and representatives, by expanding the class of reports that must be made to expressly include misconduct by individual advisers and employees;
  • introduce new and heightened penalties for non-reporting, giving ASIC greater flexibility to impose a range of penalties in response to a failure to report;
  • require ASIC to publish data on breach reports for major licensees; and
  • introduce an equivalent reporting regime  for credit licensees (who are currently subject only to annual compliance reporting).

“The proposals outlined in this paper are aimed at improving transparency and accountability in the financial services sector by broadening and strengthening the obligations on licensees to make timely reports to ASIC about misconduct or suspected misconduct that they become aware of,” Minister O’Dwyer said.

“The Taskforce is now taking the important step of gathering community and industry feedback on these proposals before making final recommendations to the Government in September.”

The ASIC Enforcement Review Taskforce was established by the Turnbull Government in October 2016.  The terms of reference allow for a thorough examination of the adequacy of ASIC's enforcement regime, including in relation to industry Codes of Conduct, to deter misconduct and foster consumer confidence in the financial system.

Membership of the Taskforce includes senior members of the Treasury, ASIC, the Attorney-General’s Department and the office of the Commonwealth Director of Public Prosecutions, as well as representatives from industry bodies, consumer groups and academia.

The Taskforce will provide its recommendations to Government by the end of September 2017.

The position paper is available on the Treasury website. Interested stakeholders are invited to comment on the positions put forward by the Taskforce. Submissions for this consultation will close on 12 May 2017.