In a recent publication, ASIC unveiled its second report on the Reportable Situations Regime (Regime), titled “Insights from the reportable situations regime: July 2022 to June 2023” (REP 775). This report sheds light on the trends and observations gathered from breach reports submitted by AFS and credit licensees between 1 July 2022, and 30 July 2023.
Despite the implementation of the Regime over 2 years ago, ASIC’s latest report reveals that many of the concerns previously identified persist. The report highlights several key areas where licensees continue to fall short:
- Prolonged breach identification: In 17% of reported breaches, licensees took over a year to identify and initiate investigations. Delays in identifying and investigating breaches can hinder timely remediation and exacerbate the consequences for affected consumers.
- Low reporting rate: A mere 11% of the licensee population reported breaches, indicating a significant gap between expected and actual compliance. This suggests that many licensees may be disregarding their obligations under the regime.
- Staff negligence remains prevalent: Staff negligence or error continues to be the most common root cause of breaches, accounting for a significant portion of reported incidents. This highlights the need for licensees to strengthen internal controls and training programs to address this persistent issue.
- Lengthy remediation processes: 8% of reports involving compensation to customers revealed that remediation activities took, or were expected to take, more than a year to complete.
ASIC’s concerns underscore the importance of enforcing the Regime to ensure that licensees uphold their responsibilities. The regulator has expressed its commitment to taking stronger measures to enhance compliance, including conducting surveillance activities and potentially pursuing enforcement actions.
The findings of REP 775 serve as a stark reminder that licensees must prioritize compliance with the reportable situations regime. By promptly identifying and addressing breaches, licensees can mitigate the harm caused to consumers and safeguard the integrity of the financial services sector.
At McCarthy Durie Lawyers, we can help you ensure that you are meeting your compliance and legal needs.
