ASIC contemplating naming licensees on breach reports
The Australian Securities and Investments Commission (ASIC) has signalled that it may name names with respect to licensees who make breach reports next year.
The regulator said it would be considering its 2023 approach early in the new year “including whether it should include a list of all licensees who have reported to ASIC during the period”.
ASIC said it would consult with stakeholders in advance of the commencement of more public granular public reporting, likely in 2024.
ASIC flagged the possibility of naming licensees amid anger and concern generated by its first report on the new breach reporting regime and its analysis that licensees were falling short of their obligations.
The financial advice licensee anger was generated in large part by the fact that the former Government and ASIC had been warned by all the major financial adviser organisations that changes to the regime which became effective in October, last year, would see companies required to repeat even minor administrative errors.
And, notwithstanding that warning, the data contained in ASIC’s initial report has confirmed that the advice organisations were right with the ASIC report identifying that 60% of the breach reports were attributable to “staff negligence of error” with a further 9% being ascribed to “policy and process deficiency”.
This appeared to displease ASIC which said it intended to provide guidance to licensees on the circumstances in which it is appropriate for licensees to select ‘staff negligence or error’ as the root cause.
What the ASIC report also confirmed is that licensees readily report their breaches, with 79% of reports having been identified by a licensee from internal sources and equally importantly just under a quarter of all reports actually involved some form of financial loss to customers with 68% of those customers losses involving less than $10,000. In fact, nearly 76% of customer losses related to less than $100.
“Licensees reported that they had paid a total of approximately $51.6 million in compensation to 455,210 impacted customers. From the reports that quoted a customer financial loss, licensees either had or intended to financially compensate all impacted customers in 96% of cases,” the ASIC report said.
“Some of the 4% of reports where the licensee reported that they did not intend to compensate customers appeared to be reported in error (e.g. because the description indicated that there was no financial loss, or they had in fact compensated customers),” the report said.
“However, we are concerned about the remaining reports, and we are considering our regulatory response. Our view is that remediation must be initiated if a licensee, or one of its representatives, has engaged in misconduct or other failure and the misconduct or other failure has caused, or may have caused, customer loss.”
How ridiculous, ASIC have already reported that they are disappointed with the low level of breach reports received (low level in their view) and now are saying they will publish a list of those that do!
They want the industry to do the work for them, and charge them a levy while they are it.
Amazing, ASIC publicly names & shames advisers & AFSL’s, but when it comes to union super their media releases always state ‘some superannuation groups’. Why the favouritism & bias ASIC? Ah, I know…
ASIC IS CORRUPT
Cool – I do trust that next time a lawyer, accountant, doctor, engineer, dentist or vet makes a minor error that this too will be reported, recorded and placed on a public record.
What a disgusting, corrupt, incompetent and biased regulator ASIC is. Product providers give a slap over the wrist for breaches that result in damages in the millions, yet they can’t wait to get out the pitch forks for the smallest breach by an adviser / licensee in order to run them out of business. Can ASIC explain how the proposed naming and shaming for minor errors provides any benefit to clients, especially when they are more than happy to turn a blind eye to product provider actions, particularly their union fund buddies.
Over 3/4 less than $100. This is an inefficient use of resources and another kick in the guts to Licensee’s and Advisers. Shameful idiotic and litigious bullies.
If you are going to get beaten with the same stick for owning up to making a mistake as you would for trying to cover it up, what’s your incentive?
Poorly drafted legislation that has been implemented terribly and now they want to name and shame after complaining they didn’t get the results they were after. I would say ASIC is incompetent but no organisation can be this incompetent for this period. It must be deliberate.
4% – less than the likely amount with long covid and an insignificant amount compared to the proportion of tax agents with potential breaches. It’s beyond disgusting now, particularly compared to the useless stance against product providers.