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.
ASIC Eases Rules on Reportable Situations Regime
In a recent development, the Australian Securities and Investments Commission (ASIC) has revised the obligations 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.
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.
"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.
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.
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.
From July 2022 to June 2023, the Aussie regulator has approved 332 new AFS licenses. The current number of AFS authorization holders exceeds 5,000.
Recent Regulatory Updates
In a recent development, the Australian government has floated a proposal to regulate cryptocurrency trading platforms more stringently, 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.
Earlier in September 2023, ASIC spotlighted specific inadequacies in the existing design and distribution obligations concerning the distribution of over-the-counter derivatives and other high-risk retail products. This category includes contracts for differences and cryptocurrency derivatives.
The narrative of heightened financial regulation was also seen in August 2023 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.
