AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
ASIC is expected to continue its focus on green - washing in 2025, with greenwashing and mis - leading conduct involving ESG claims being one of its strategic priorities. Report on the Updated Breach-Reporting Rules The new breach-reporting rules for AFS licen - sees came into effect on 1 October 2021, arising from amendments to the Corporations Act, as inserted by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth). The reforms sought to address recommen - dations made by the Royal Commission that called for the strengthening and clarifying of the breach-reporting regime for financial services licensees. Under the new breach-reporting rules, ASIC is required to publish an annual report stating its observations arising from the breach reports received. ASIC published its third insights report in Octo - ber 2024 in relation to the reports lodged with ASIC by licensees under the regime between 1 July 2023 and 30 June 2024. The report focuses on insights regarding the following: • the volume of reports and nature of lodgers; • the subject of the reports and root causes of the breaches; • the identification and investigation of breach - es; and • customer impact, remediation and rectifica - tion of breaches. Some of the key insights shared by ASIC in Report 800 included that: • the overall volume of reports decreased by 27% from the previous period;
• AFS licensees reported more than credit licensees, and larger AFS licensees lodged a higher proportion of reports compared to smaller AFS licensees; • most reports were about a financial service, credit activity or product line; • the most notable change during the report - ing period was an increase in the number of reports relating to superannuation; • false or misleading statements remained the most common category of issues to which reports related; • staff negligence and/or error continued to be the most common root cause of breaches; • most breaches were identified through staff reports or business unit reports; • of concern, breaches identified from internal sources, such as internal compliance activi - ties, decreased; • the time taken for licensees to identify and commence an investigation into a breach increased; • a significant proportion of breaches involved customer financial loss; • licensees generally took less time on average to remediate affected customers; • staff training continued to be the most com - mon rectification method; and • significant variability was observed in the time taken to rectify breaches. Undoubtedly, breach reporting will remain an area of focus for ASIC. The Foreign Financial Service Providers (FFSP) Regime The FFSP regime has been in a state of regula - tory uncertainty following a prolonged period of ongoing transitional arrangements. By way of background, in Australia, FFSPs to wholesale clients have historically been able to
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