ASIC has announced it is consulting on a proposal to provide additional relief under the Corporations Act and National Credit Act reportable situations regime. Background.

ASIC is proposing relief from the automatic reporting of certain breaches of the misleading and deceptive conduct provisions and certain contraventions of civil penalty provisions when:

• the breach has been rectified within 30 days from when it first occurred (this includes paying any necessary remediation), and
• the number of impacted consumers does not exceed five, and
• the total financial loss or damage to all impacted consumers resulting from the breach does not exceed $500 (including where the loss has been remediated), and
• the breach is not a contravention of the client money reporting rules and clearing and settlement rules.

Breaches of these provisions are deemed ‘significant’ breaches of ‘core obligations’ under section 912D(4)(b) and (c) of the Corporations Act 2001 and section 50A(4)(b) and (d) of the National Consumer Credit Protection Act 2009.

Breaches covered by the criteria of ASIC’s proposal may still be reportable under other circumstances in section 912D of the Corporations Act and section 50A of the National Credit Act. For example, these breaches may satisfy the ‘significance test’ regarding the number and frequency of similar breaches under section 912D(5)(a) of the Corporations Act and section 50A(5)(a) of the National Credit Act. This means that licensees should record these breaches in a breach register to ensure that they comply with their obligation to report all reportable situations: see RG 78 at RG 78.144.

More broadly, licensees are required to have systems and processes in place to identify, escalate, investigate, rectify and capture incidents and breaches as part of their general obligations to maintain adequate risk management systems and to ensure compliance with their licensee obligations: see section 912A(1) of the Corporations Act, section 47(1) of the National Credit Act and RG 78.132. ASIC says the proposed relief does not affect these obligations.

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.