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Broker breaches guidance expected in ‘early 2021’

by Annie Kane12 minute read
Broker breaches guidance expected in ‘early 2021’

ASIC will release a new regulatory guide on the application of the incoming law on ACL breach reporting for consultation “in early 2021”.

At the beginning of the year, the federal government released for consultation a raft of exposure draft legislation, implementing 22 recommendations and two additional commitments arising from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Among the proposals was a new obligation to check references and share information on Australian credit licensees (ACL), as well as new breach reporting requirements and further measures about notifying and remediating customers where misconduct occurs.

It will require Australian credit licensees to report breaches and other reportable circumstances, in the same manner as AFS licensees.


The latter reforms carry prison sentences if breached.

Speaking at the 30th Annual Credit Law Conference earlier this week, ASIC commissioner Sean Hughes confirmed that ASIC will release a new regulatory guide on the application of the incoming law “in early 2021”.

He said: “The proposed reforms include requirements for third-party licensees to report breaches by individual mortgage brokers and financial adviser representatives of other licensees. 

“We intend to consult on an updated RG 78 on breach reporting in early 2021.

“We’re also going to consult on an information sheet for new requirements for financial advisers and mortgage brokers to investigate misconduct, and notify and remediate affected clients.”

Touching on the new reference checking and information-sharing protocol, Mr Hughes noted that the new legislation would give ASIC the power to make legislative instruments determining the protocols for reference checking and information sharing about prospective financial adviser and mortgage broker representatives of AFS licensees and credit licensees.

“Once final legislation is introduced, ASIC intends to consult with industry to seek feedback on the proposed requirements for licensees under the ASIC protocol,” he said.

“This will include consulting on a draft info sheet, which will provide guidance on the ASIC protocol.

“We will be taking industry feedback into account before we finalise the protocol in the first half of 2021, as soon as practical ahead of the October 2021 commencement.”

Touching briefly on the federal government’s proposal to remove some responsible lending laws (which commissioner Hughes recently revealed he first heard about when reading the Treasurers’ statement through media reports), Mr Hughes told the law conference: “[T]his is very much an ongoing process and entirely a matter for government to give effect to its policy. 

“We’re working closely and collaboratively with Treasury and APRA to progress the reforms announced by the Treasurer on 25 September. 

“We look forward to seeing the draft legislation soon.”

ASIC ‘not immune from disruptive impacts’

Mr Hughes also acknowledged the recent upheaval at ASIC after a relocation expenses controversy led to the resignation of deputy chair Daniel Crennan QC this week and the “stepping aside” of chair James Shipton.

The ASIC commissioner noted that 2020 had been a year of “unprecedented business and community disruption”, adding that ASIC was “not immune from disruptive impacts”.

“I’m sure you will have seen the announcement on Friday that Mr James Shipton has stood aside as the ASIC chair while an independent review arising from an ANAO audit is undertaken and which will report to the Treasury. 

“Deputy chair Ms Karen Chester was appointed by the Treasurer as acting chair on Friday afternoon.  

“Amid this disruption and the ongoing uncertainty to business and consumers which the pandemic has brought, there is something that cannot and should not change – ASIC’s core purpose. 

“We’re here to ensure confidence in a financial system that – even under stress – can remain fair, strong and efficient,” he said.

“Confidence is the bedrock of the economic recovery process. This is the purpose of ASIC’s work, both in the immediate context of the pandemic and whatever evolves next beyond it.”

He concluded: “As we all evolve and adapt in order to ride out this period of unprecedented business disruption, you can expect ASIC to evolve and adapt alongside you.

“But one thing remains the same – the expectation of fairness.

“Just as it has for the past 30 years – before the internet and indeed ASIC – existed in their present forms.

“Effective, adaptive regulation will continue to ensure confidence in a financial system that – even under stress – can remain fair, strong and efficient.”

[Related: Timing and application of new misconduct rules questioned]

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