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ASIC has said it usually takes no action against firms that admit regulatory breaches – but that failure to self-report is a criminal offence.
Deputy chairman Peter Kell said the regulator planned to conduct a review of the self-reporting of significant breaches by AFS licensees due to concerns about inconsistencies and delays.
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“We carefully assess all breach reports we receive. Some reports will lead to formal enforcement action, but most will not,” Mr Kell said.
“In most cases where we take no further action arising from a breach report, we find that the licensee is already working on or has rectified the breach.
“In such cases, we will generally notify the licensee that we do not intend to make further inquiries about the matter.”
Licensees are required to self-report within 10 business days of becoming aware of a breach.
Mr Kell said inadequate or late reporting could indicate to ASIC that the firm has “broader compliance and cultural issues” and would be a “red flag” for closer scrutiny.
When ASIC is informed about breaches it considers when the report was made, the impact of the compliance failure and the firm’s plan for rectifying it, according to Mr Kell.
Possible responses from ASIC may include working with the licensee to improve its compliance procedures, investigating the firm and taking action against responsible parties, he added.
Mr Kell said ASIC understood that “things will go wrong from time to time” with compliance, especially for larger firms.
“ASIC will work with licensees who are operating in good faith and taking their obligations seriously,” he said.
“However, we will take regulatory action if we find the processes for breach reporting are inadequate.”
[Related: Companies face $7.7m fines in ‘landmark’ NCCP prosecution]
