Reportable situations regime: ASIC modifies licensees’ obligations

ASIC has introduced ASIC Corporations and Credit (Amendment) Instrument 2023/589, which modifies the reportable situations regime for licensees. This modification exempts licensees from submitting notifications about certain reportable situations starting from 20 October 2023.
The reportable situations regime requires AFS licensees and Australian credit licensees to automatically inform ASIC about specific reportable situations. These situations include breaches of ‚core obligations’ as outlined in section 912D of the Corporations Act 2001 and section 50A of the National Consumer Credit Protection Act 2009.
However, the present Instrument modifies this requirement by excluding certain breaches of the misleading or deceptive conduct provisions in subsection 1041H(1) of the Corporations Act and subsection 12DA(1) of the ASIC Act, as well as the false or misleading misrepresentations provision in s12DB(1) of the ASIC Act. These exclusions mean that these breaches are not considered significant breaches of a core obligation and therefore not automatically reportable.
To qualify for these exclusions, the breach must only impact one person or a group of individuals jointly holding a financial product, credit product, consumer lease, mortgage, or guarantee. Additionally, the breach must not result in any financial loss or damage to any person, and it should not give rise to any other reportable situation. One example of such a breach is when a staff member provides incorrect advice to a customer regarding their daily external transfer limit during a phone call but corrects the error in the same call without any actual or anticipated financial loss to the consumer.
Starting from 20 October 2023, licensees have an extended timeframe of 90 days (previously 30 days) from when they become aware or recklessly disregard reasonable grounds to believe that a reportable situation has arisen. They now have 90 days to lodge a report with ASIC if the situation has underlying circumstances that are the same as or substantially similar to a previously reported reportable situation.
Moreover, the Instrument modifies subsection 912D(3) of the Corporations Act to align with the amended paragraphs of the ‚financial services law‘ definition introduced by the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023.