Breaches of misleading and deceptive conduct provisions

Following concerns about the costs of reporting some reportable situations that have limited regulatory benefit, the Instrument exempts licensees from reporting breaches of the misleading and deceptive conduct provisions (i.e., misleading and deceptive conduct or false and misleading representations in section 1041H of the Corporations Act 2001 (Cth) and sections 12DA and 12DB of the Australian Securities and Investment Commissions Act 2001 (Cth)) that:

Give rise to a single reportable situation
Impacts only one client or, if the product is jointly held, only impacts those clients
Causes no financial loss or damage, or likely financial loss or damage
Is not otherwise a reportable situation

Prior to the Instrument being registered, any breach of the misleading and deceptive conduct provisions was automatically reportable to ASIC regardless of whether the contravention was significant or insignificant.

Reporting periods for previously reported situations

Additionally, the Instrument gives licensees up to 90 days (instead of the previously required 30 days) to report a reportable situation that has underlying circumstances that are the same as, or substantially similar to, underlying circumstances of an earlier reportable situation that the licensee has reported to ASIC (i.e., a related reportable situation).

Next steps

These modifications are a sensible approach by ASIC and we suggest this is an opportune time for licensees to review and look to update their breach reporting policy accordingly.