In this edition of Financial Services Thinking we highlight the countdown to a raft of reforms – the new breach reporting obligations, the design and distribution obligations, and the hawking reforms. We also share a ‘Hot Tip’ from partner Selina Nutley recommending licensees ensure their internal dispute resolution policies and systems are ready to meet the new stricter, shorter timeframes required from 5 October 2021.
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ASIC has released the updated RG 78 Breach reporting by AFS licensees and credit licensees to help credit and AFS licensees meet the new breach reporting obligations commencing 1 October 2021.
AFS licensees should note that the existing breach reporting framework in the Corporations Act (in force prior to 1 October 2021) continues to apply to the reporting of certain breaches. The superseded version of RG 78 (SRG 78 Breach reporting by AFS licensees, issued March 2020) is available for guidance for AFS licensees in these circumstances.
At the same time, ASIC also published INFO 259 Complying with the notify, investigate, and remediate obligations. This information sheet sets out actions that must be taken by licensees to notify affected customers of a breach of the law, investigate the breach, and remediate impacted customers. This implements a new obligation that applies to licensees of financial advisers and mortgage brokers in certain situations.
We are guiding our clients through the required steps and can help with your preparations. If you would like to discuss the changes and how we can help, then please get in touch with partner Elliott Stumm.
ASIC has formally extended the time public companies have to hold their AGMs:
This formalises and adds to the no-action position ASIC has taken giving companies with balance dates up to 7 July 2021 an additional two months to hold AGMs.
ASIC has recently issued INFO 264 FAQs: Design and distribution obligations for advice licensees and financial advisers explaining how the design and distribution obligations for issuers and distributors of financial products apply to advice licensees and financial advisers when providing personal advice.
ASIC has now finalised and published Regulatory Guide 38 The hawking prohibition following consultation on the proposed hawking reforms which come into effect on 5 October 2021.
We encourage all financial services providers and sellers to review their advertising and sale practices ahead of the start date. If you are unsure whether your practices comply with the hawking prohibitions, contact a member of our Funds Management team for help. Also, for background information you can read our recent article explaining these reforms.
ASIC has released its annual report for AFS licensees, Australian credit licensees, lawyers, application service providers, and professionals working in financial services. The report outlines key issues, new and proposed changes to licensing processes, and other work ASIC has undertaken affecting licensees.
Of the 741 new AFS licence applications, 308 new credit licence applications and 1,399 AFS licence and credit licence variation applications assessed the 2020–21 financial year—
ASIC flagged the following key issues for licence applications and ASIC’s licensing approach:
ASIC flagged these issues as being particularly relevant for recent applicants or for entities planning to apply for a new or varied licence.
ASIC Regulatory Guide 271 Internal dispute resolution (IDR) comes into effect on 5 October 2021. Licensees must ensure their IDR policies and systems comply with the stricter, shorter timeframes.