It’s true: the Australian Securities and Investments Commission (ASIC) is being more flexible when it comes to the initial stages of implementing the Financial Services Reform Act (FSRA). The regulator says it’s not overly concerned with newly licensed businesses that are doing their best to comply, but it is more disturbed by individuals and businesses that are deliberately going out of their way to break the law.

Executive Director FSR Ian Johnston says the regulator wants the outcomes of the FSRA to be delivered in a “realistic matter”, but it realises there is still industry uncertainty when it comes to disclosure and reporting breaches.

He says licenceholders who are submitting to regulation for the first time and are “genuinely attempting to comply” will have little to fear from ASIC. “We are more concerned about breaches that are deliberate or systemic.”

Mr Johnston says some Australian financial services licensees may be in technical breach of their licences because they don’t have all the authorisations needed to carry out business. 

Examples of technical breaches include licensees who:

• are acting under a binder but didn’t apply for the “issue” authorisation for general insurance products;
• are advising or dealing in consumer credit insurance but didn’t apply for that authorisation;
• applied early in the transition period but were not able to select the authorisation to advise in managed investment schemes; and
• provide services in relation to products that fall strictly outside the normal product class definitions. In this case, certain “miscellaneous” authorisations may be required, eg. for managed investment warrants.

“Where licensees act quickly to remedy technical breaches, ASIC will not take action against them,” Mr Johnston said.

He says ASIC will continue to consult with industry and consumer groups over the next 12 months to provide guidance where it’s needed.