Have you received a notice from ASIC?

December 2018

We recently issued an Alert to our clients following the receipt of notices from ASIC asking for the production of all books and records and for responses to 40 pages of questions about their financial services businesses by mid-January 2019. In this article partner Brit Ibanez explains what you need to do when you receive a notice.

What should you do if you receive a notice in the lead up to Christmas?

  1. Our key piece of advice is to act promptly – both in seeking advice and approaching ASIC for an extension if you expect you will have difficulty in complying with the timeframe under the notice because of the Christmas break.

    ASIC's initial view in issuing the notices seemed to be if a business could not respond to the notice by mid-January, then it was not properly resourced. In our experience, it is important to demonstrate to ASIC both in words and actions that you understand the significance of the notice and will do your utmost to comply with it promptly.
  2. We also recommend you begin compiling the material requested whilst you are seeking advice or making representations for an extension. It may assist you in securing an extension if you offer to provide documents in tranches.
  3. It is important to remember ASIC's powers do not necessarily override your right to claim legal professional privilege. In responding to any notice, you should be careful about not inadvertently waiving that privilege. This is a complex area so you should seek advice.

What is ASIC's objectives?

In our observation, ASIC's objective is identifying AFS licensees who might warrant further investigation. Some key issues recently identified in many businesses include—

  • inadequate oversight by the board
  • overly complex decision-making processes
  • an under-resourced compliance and risk function
  • remuneration frameworks that do not incentivise the right behaviours.

In the last year, a common theme has been consideration of whether a business "Should do something?" rather than "Can we do something?" Compliance with the law may extend beyond simple black-letter law compliance to compliance with the "spirit" of the legislation.

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