In our Responsible Manager seminars we use case studies to discuss compliance systems, breach reporting and remediation.

Two recent announcements from ASIC (one relating to Suncorp and the other to BT Financial Group) show its responses to self-reporting of Australian Financial Services Licence breaches under section 912D Corporations Act.

In response to the Suncorp Group reporting a significant number of breaches ASIC requested an independent review of its compliance systems.

The breaches reported by Suncorp included failure to provide promoted discounts to:

• eligible multi policy general insurance customers
• some senior card holders on their home and contents policies, and
• some customers who purchased contents insurance with a portable cover option online.

The breaches also included failure to disclose significant policy upgrades to some life insurance customers.

In the period from June 2010 to date, over 849,000 Suncorp customers have been affected by the reported breaches, requiring refunds of approximately $23 million.

The Suncorp Group has agreed to implement a number of enhancements to its existing program of compliance system improvement across its life and general insurance businesses.

Suncorp has committed to improve the processes for:

• monitoring and supervising representatives in its life and general insurance businesses
• reporting incidents and breaches in its life and general insurance businesses
• administering insurance policy customer discounts in its general insurance business, and
• training representatives in its general insurance business.

Suncorp will report regularly to ASIC this year until the compliance system changes are complete.

Suncorp has already remediated most affected customers and is completing the refund processes.

BT Financial Group (BT) will refund customers after it discovered that some of its Wrap and SuperWrap customers have been paying adviser fees in excess of disclosed percentage ranges. In some cases, there was confusion around whether the percentage ranges disclosed represented the maximum adviser fees that could have been charged.

BT discovered the problem, self reported to ASIC of their own accord and have kept ASIC informed.

BT undertook a review to identify customers potentially impacted, and to ensure that they were compensated where appropriate. BT has also issued revised disclosure and put in place strengthened operational controls to prevent similar occurrences in the future.