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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Reach out to our team for more information or assistance.

ASIC

Breach reporting 

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 The superseded version of RG 78 (SRG 78 Breach reporting by AFS licensees, issued March 2020) is available for guidance for AFS licensees in these circumstances.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.

Time extended for AGMs

ASIC has formally extended the time public companies have to hold their AGMs:

• All public companies with balance dates between 21 February 2021 and 7 July 2021 have an additional two months to hold their AGM.
• Public companies limited by guarantee with balance dates between 24 January 2021 and 7 April 2021 have an additional four months to hold their AGM.

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.

More details on DDO obligations

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.

Contact a member of our Funds Management team who will explain what you need to do so you are ready to comply on 5 October 2021.  Read about your obligations in our DDO Survival Guide.

Updated regulatory guidance on hawking reforms

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.

Licensing and professional registration activities: 2021 update

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—

• 339 new AFS licences were granted
• 119 new credit licences were granted
• 537 AFS and credit licence variation applications were granted.

ASIC flagged the following key issues for licence applications and ASIC’s licensing approach:

• ASIC’s response to licensing during the pandemic.
• INFO 240 and INF0 244 – particularly the need for all fit and proper persons to be included and disclosed when lodging an application.
• The licensing process and timing expectations, including expected delays given high volumes of applications under assessment.
• The importance of full and frank disclosure in an application.

ASIC flagged these issues as being particularly relevant for recent applicants or for entities planning to apply for a new or varied licence.

Partner Elliott Stumm and our Funds Management team can assist with your licensing queries.

HOT TIP

Are you ready for the new internal dispute resolution requirements?

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.

If you need help with reviewing your systems and ensuring they meet the new standards, then contact partner Selina Nutley who can help.  You can also read our article for background information.