As the financial services industry continues to adjust to the complexities of ASIC’s reportable situations regime, Brisbane Compliance Forum Guest Speaker Simon Carrodus (Hamilton Locke) offers valuable insights into how licensees—both AFSL and ACL holders—can better manage risk and align with regulatory expectations. Combined with the changing political landscape following the federal election and the release of new data in ASIC’s 2024 breach reporting review (REP 800), several key implications emerge for compliance managers and financial planners.
The Case Study: Over-reporting vs. Under-reporting
In a recent case, a mid-sized financial advice firm submitted 17 breach reports to ASIC over a six-month period, all related to administrative or minor compliance oversights. Despite no client harm in most cases, the firm feared regulatory scrutiny for under-reporting and instead opted to over-disclose.
This reflects a broader industry pattern. According to ASIC’s 2024 Report 800, over 12,000 breach reports were submitted in a single year, with 47% of breaches caused by inadequate systems and processes, and 23% linked to staff error. Many were low-impact but still met the threshold for reporting under RG 78.
What compliance leaders can take from this:
- Implement decision matrices that clearly define significance across advice, disclosure, and misconduct types.
- Ensure legal oversight or RM sign-off for borderline cases.
- Calibrate internal systems to consistently detect, document, and triage incidents.
ASIC’s Position: Broad Obligations, Narrow Tolerance
ASIC maintains that the regime’s broad scope is intentional. Less than 20% of licensees lodged any reports in 2023, suggesting significant under-reporting across the sector. Yet, of those who did report in 2024:
- 79% of breaches impacted customers, either financially or non-financially.
- $92.1 million was paid in remediation.
- Credit products and general insurance made up over 50% of reported cases.
ASIC continues to expect reporting even where uncertainty exists, but legal practitioners like Carrodus warn this may lead to misalignment between intention and interpretation.
Election 2025: Implications for AFSL and ACL Holders
The outcome of the 2025 federal election could reshape Australia’s financial compliance landscape. Depending on the government’s direction, licensees may face:
- Heightened regulatory enforcement:
- Expanded breach categories (e.g. greenwashing, consumer vulnerability)
- Greater whistleblower protections and ASIC investigative powers
- Pressure to simplify regulatory burdens:
- Potential reforms to RG 78 to improve clarity and reduce over-reporting
- Stronger distinction between ‘significant’ and ‘administrative’ breaches
- Incentives for regtech and digitisation:
- Grants or guidance for small licensees adopting automated compliance tools
- Expectation to digitalise breach registers and monitoring workflows
Emerging Issues to Watch
- When does an investigation officially commence? ASIC suggests it begins once a licensee suspects a breach may have occurred.
- What if the breach is resolved between 30 and 60 days? Reporting may still be required if the breach is serious or systemic in nature.
- Authorised representative breaches are still the responsibility of the licensee.
- Low significance thresholds have increased the volume of reportable breaches, many of which are minor, and some are questionable.
- Breach register maintenance is critical: ASIC views it as evidence of a licensee’s diligence, particularly where no report is submitted.
Key Actions for Licensees
✅ Review breach reporting protocols with legal advisors
✅ Train staff to assess incidents against ASIC thresholds
✅ Maintain a comprehensive breach/incident register
✅ Monitor post-election updates and RG 78 consultation
✅ Benchmark against ASIC data to identify internal blind spots
Navigating ASIC’s reportable situations regime is no longer just about simple compliance—it’s about making sustainable, documented, and defensible decisions. With regulatory scrutiny tightening and legal interpretations evolving, proactive frameworks will be the key to the difference between risk and resilience.
Call to Action:
Whether you’re navigating complex compliance requirements or seeking greater peace of mind, investing in internal audit coaching or engaging an independent auditor can be a strategic advantage, not just a regulatory compliance measure. If your business is ready to strengthen its audit processes, uncover hidden risks, or validate your internal controls with an expert second opinion, now is the time to act.
Contact our compliance team today to explore tailored internal support or consultation with an experienced compliance consultant at [email protected].
