Financial advice accounted for 7% of breach reports: ASIC

The Australian Securities and Investments Commission (ASIC) released its third publication on information lodged under the reportable situations regime on Thursday, which showed that just 7 per cent of reports related to financial advice.

The publication provides high-level insights into reporting trends from 1 July 2023 to 30 June 2024. The publication covers licensee population reporting, breach identification and investigation, root causes, consumer impact and remediation efforts.

During the period, licensees submitted 12,298 reports, 79 per cent of which had a financial and/or non-financial impact on customers.

According to the ASIC numbers, as at 30 June 2024, licensees reported paying around $92.1 million in compensation to approximately 494,000 customers for breaches during the reporting period.

However, the number of reports was down 27 per cent over the previous corresponding period, which ASIC attributed to a greater uptake by licensees in grouping similar breaches into one report and a decrease in reportable situations relating to misleading or deceptive conduct provisions and the false or misleading statements provision.

This was divided by 913 AFSLs who lodged 8,636 reports and 161 credit licensees who submitted 4,088 reports.

Some 8 per cent of reports were about false or misleading statements. This was a decrease of 6 percentage points compared with the previous reporting period.

The regulator said this drop was largely due to the release of ASIC Corporations and Credit (Amendment) Instrument 2023/589 in October last year.

The Instrument modifies the reporting requirements to exclude certain breaches of the misleading or deceptive conduct provisions in subsection 1041H(1) of the Corporations Act or subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the false or misleading misrepresentations provision in s12DB(1) of the ASIC Act from being deemed significant breaches of a core obligation and therefore automatically reportable.

General licensee obligations (19 per cent) and lending (17 per cent) were the next most common issues, while the number of licensees that lodged at least one report increased by 10 per cent from the previous reporting period to 1,024 licensees.

The regulator added that there has been an uptick in the number of reports stemming from smaller licensees, with AFSLs with less than $50 million, who represent 10 per cent of the AFSL population, submitting 739 reports.

"While it is still mostly the larger licensees that are reporting under the regime, we expect all licensees, regardless of size, to have robust systems and processes in place to ensure timely detection and reporting of any non-compliance. If there are reasonable grounds to believe that a reportable situation has arisen, it is a legal obligation for licensees of any size to lodge a report with ASIC," the regulator said.