ASIC reportable situations regime — deemed significance tests under RG 78
How the reportable situations regime under section 912D of the Corporations Act 2001 captures core obligations breaches, with deemed significance tests under RG 78.
The regime
AFS licensees and Australian credit licensees are required to report ‘reportable situations’ to ASIC. This obligation is established under section 912D of the Corporations Act 2001 (Cth). The regime is part of the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 and commenced on 1 October 2021.
ASIC provides guidance on the reporting obligations in Regulatory Guide 78 — Breach reporting by AFS licensees and credit licensees. This guide serves as the primary reference for understanding the requirements.
Reportable situations must be reported to ASIC within 30 calendar days of the licensee first knowing, or being reckless as to whether, a reportable situation has arisen.
Deemed significance — section 912D(4)
A breach of a core obligation is automatically deemed significant under the reportable situations regime. This occurs if the breach results in, or is likely to result in, material loss or damage. Similarly, a breach that gives rise to a civil penalty contravention is also deemed significant.
Furthermore, certain types of conduct automatically trigger the deemed significance test. A breach that constitutes a contravention of section 1041G, relating to dishonest conduct, or section 1041H, relating to misleading and deceptive conduct, is deemed significant.
Finally, the commission of a serious fraud offence is also considered a deemed significant situation requiring reporting.
What is reported and how
Reports of reportable situations must be lodged via the ASIC Regulatory Portal. These reports require specific details to be provided, including information about the nature of the breach, its root cause, the impact on consumers, the remediation steps taken, and associated timeframes. Reportable situations RG 78 explained
ASIC publishes annual statistics relating to reportable situations. This publication commenced from 1 July 2022 and provides an overview of the types of situations being reported.
The process of determining whether a situation is reportable can itself trigger a separate reportable investigation. This applies when investigations exceed 30 days from commencement. Reportable situations RG 78 explained
Remediation and consumer reporting
Remediation of affected clients is a key component of the ASIC reportable situations regime. Licensees are required to take reasonable steps to remediate any loss or damage resulting from a reportable situation. Expectations regarding remediation processes are detailed in Regulatory Guide 277 — Consumer remediation.
Where a reportable situation has resulted in loss or damage to clients, licensees must provide written notification to those affected. This notification is a direct consequence of the breach and its impact on clients.
Failure to comply with the reportable situations obligations, including remediation and notification requirements, constitutes a contravention and carries civil penalty consequences.
Frequently asked
Do credit representatives need to report directly to ASIC?
No. Credit representatives report to their authorising credit licensee; the licensee is responsible for lodging reportable situations with ASIC.
Does the 30-day clock start at first awareness or at conclusion of investigation?
The clock starts when the licensee first knows, or is reckless as to whether there are reasonable grounds to believe, a reportable situation has arisen — not when an investigation concludes.