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ASIC to be ‘reasonable’ in enforcing new laws

by Annie Kane8 minute read
ASIC to be ‘reasonable’ in enforcing new laws

The regulator will take a “reasonable approach” when enforcing the swathe of incoming financial services laws, chair Joe Longo has said.

The Australian Securities & Investments Commission (ASIC) has said it will take a “reasonable approach” to enforcing new financial services reforms in their early stages of implementation, given their wide impact and the current COVID-19 environment.

From October 2021, six new laws will come into force impacting the broker channel and financial services industry more broadly.

These are:

All six of these incoming reforms seek to implement recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

However, given that many of these reforms were delayed when the COVID-19 pandemic hit (with final guidance for two of the above reforms still awaited) – as well as the fact that the reforms require significant process changes (made harder by ongoing lockdowns) – the financial services regulator has said that its approach to early enforcement would be “reasonable”.

‘We want to ensure the reforms are successfully implemented’

ASIC chair Joe Longo said: “While these reforms have been in the pipeline for some time, ASIC recognises they require significant changes to businesses’ systems and processes and take effect at the same time industry is facing other challenges, including from COVID-19 and renewed lockdowns.

“We therefore recognise there will be a period of transition as industry finalises implementation of additional compliance measures, and ASIC will take a reasonable approach in the early stages of these reforms, provided industry participants are using their best efforts to comply.”

As such, Mr Longo said that ASIC’s approach would “take into account the context that firms are operating in”, including “the scale of the changes, the challenges arising from the current operating environment and noting industry will receive the final guidance on two measures relatively close to the start date”.

“ASIC’s initial approach extends to technical or inadvertent breaches, where firms have systems changes underway and act quickly to address problems as they arise. However, where firms are not acting in good faith or where we detect conduct causing actual harm, we will not hesitate to enforce the law,” he said.

“We want to ensure the reforms are successfully implemented – and that means we will continue to work with industry, and build on the efforts by industry associations and individual licensees in preparing for these reforms.”

Mr Longo highlighted that he believed the incoming laws would provide consumers with long-term protection from the harms highlighted by the royal commission, and close regulatory gaps that previously existed.

“These changes will support fairer outcomes for consumers and a stronger financial system for all Australians. The benefits will increase over time as consumer outcomes become the focus and experience accrues,” he said.

The reforms will also provide ASIC with greater visibility of issues in the marketplace, which it said it hopes would enable it to identify problems earlier and address them more quickly.

The broking associations have been busy working with Treasury on the incoming arrangements and their impacts on the broker channel, with MFAA CEO Mike Felton recently outlining his conversations with Treasury and ASIC on some of the unintended consequences of the incoming laws.

The Treasury announced earlier this week that it would be amending the design and distribution obligation legislation to reflect, which has been welcomed by the broker association.

[Related: Treasury to amend DDO requirements] 

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AUTHOR

Annie Kane is the managing editor of Momentum's mortgage broking title, The Adviser.

As well as leading the editorial strategy, Annie writes news and features about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape.

She is also the host of the Elite Broker, New Broker, Mortgage & Finance Leader, Women in Finance and In Focus podcasts and The Adviser Live webcasts. 

Annie regularly emcees industry events and awards, such as the Better Business Summit, the Women in Finance Summit as well as other industry events.

Prior to joining The Adviser in 2016, Annie wrote for The Guardian Australia and had a speciality in sustainability.

She has also had her work published in several leading consumer titles, including Elle (Australia) magazine, BBC Music, BBC History and Homes & Antiques magazines.  

Comments (7)

  • In simple term it is a total non sense approach by ASIC.
    Not sure why the Government is wasting money on such people in ASIC ?
    Need a commission on ASIC ad their functionality. Let them go and promote vaccination to prevent COVID spread.
    Only one condition they can implement is , if you need loan , you need to have vaccination !! This responsible lending and BID Not these type of useless announcements.
    0
  • Is anyone sick of all this BS? BID, DDO, CIF etc etc.
    Do you enjoy being a broker as much these days, continually encumbered with pointless additional compliance requirements? I sure don't & I know i'm not alone but I accept that there will be some out there that with rose tinted glasses.
    1
  • A word from your friendly "put things in English" compliance provider:

    * Reference checking - woo hoo. Why wouldn't you?
    * Breach reporting - pretty hard for brokers to commit a "breach" serious enough to be reportable...apart from the fact that many are not conducting "proper" compliance testing in your business.
    * DDO - was never intended to apply to mortgage brokers and, besides, BID covers it!
    * Pressure-selling of insurance add-ons? What brokers are doing this?
    * IDR reforms - ooooo - keep an eye on your Facebook page and make sure you address complaints inside 30 days instead of 45. How many brokers get complaints about their services?
    * Hawking reforms - doesn't apply to credit anyway but how many of you are cold-calling for your services anyway?

    If you have a "proper" compliance programme - i.e. NOT just your pretty files - you will be FINE.

    In other words, "Oktoberfest" is a non-event for nearly all of us. Business as usual. Happy Friday peeps!!
    2
  • LOL - to banks maybe, to brokers, not so much!
    0
  • Lol - does that mean they're usually UNreasonable?
    1
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