Australia’s financial regulator is reviewing how firms report breaches of the rules following concerns about inconsistent practice and delays in blowing the whistle of major problems.

Australia’s financial regulator is reviewing how firms report breaches of the rules following concerns about inconsistent practice and delays in blowing the whistle of major problems.

The Australian Securities and Investment Commission has launched the review into reporting by Australian Financial Services Licensees, the watchdog said in a statement on its website.

What are called “breach reports” are an important part of how the sector is regulated; failing to report with reporting requirements is a crime.

“Some recent enforcement actions against both large and small firms have highlighted deficiencies in the approach to breach reports, in particular, the timeframe for reporting significant breaches,” ASIC deputy chairman Peter Kell said in a recent speech.

For example, a firm must report a problem as soon as practicable and at least 10 business days from becoming aware of a breach, he said.

‘To be clear, this means that a licensee should not wait until after it has completed a full investigation to satisfy itself whether or not the breach or likely breach is significant. Nor should the licensee wait until the breach or likely breach has been considered by its board of directors or by its internal or external legal advisers. If in doubt, err on the side of caution and report the breach to ASIC,” he said.

The issue of reporting breaches quickly comes at a time when two of Australia’s major financial institutions – Macquarie and Commonwealth Bank – have been contacting clients about issues with previous cases of poor wealth management advice. (See articles here and here.)