Mastering Compliance: key takeaways from our round table discussion

 – In the world of insurance compliance, understanding the framework of reportable situations is crucial. Last week, Curium—specialist in effective compliance in the insurance industry—joined forces with Gilchrist Connell, a leading Australian law firm with deep roots in the insurance sector, to conduct a round table discussion titled “Compliance in Action.” This event aimed to demystify the complexities surrounding reportable situations and response strategies, providing attendees with actionable insights into navigating this critical compliance aspect.

 

What is a Reportable Situation?

A reportable situation is a compliance breach that needs to be brought to the attention of ASIC (Australian Securities and Investments Commission) or other regulators. These situations are critical and mean:

  1. Significant breaches of ‘core obligations.’ These are the fundamental duties that financial service providers must uphold, such as offering efficient, honest, and fair services.
  2. Prolonged investigations that exceed 30 days when investigating a potentially significant breach.
  3. Additional reportable situations such as gross negligence or fraud.

When such situations arise, a detailed report, including the incident and any internal evaluations, must be shared with ASIC or other regulators.

What constitutes a  Significant Breach?

During our conversation, we discussed how to assess whether a breach of core obligation is ‘significant.’ The criteria set by ASIC include:

  • The number and frequency of similar breaches – has this happened before?
  • The impact of the breach on the AFS licensee’s capacity to provide its services – can the licensee still provide adequate service?
  • Inadequacy of the AFS licensee’s compliance arrangements – is this a single occurrence or is it a symptom of a larger underlying problem? 

Businesses need to reflect on several questions to evaluate the severity of a breach, like whether it affected multiple customers, its recurrence, the impact on service delivery, and the breach’s cause—be it human error or a systemic issue.

Spotting, Responding, and Managing a Reportable Situation

A reportable situation starts with an incident, and spotting such incidents is crucial as they are outcomes that deviate from typical activities. Here’s how to handle these situations:

  1. Initial Investigation: Look for ‘red flags’ that may indicate a problem and decide which parts of the business should be involved in the investigation and which stakeholders need to be informed.
  2. Estimating the Extent: Determine how extensive the problem is, whether it is a breach, and if it’s reportable, and identify the breached legislative provisions.
  3. Reporting to Regulators: Describe the issue accurately, report on the status of the investigation, isolate the problem, and start remedial action.
  4. Remediation, Rectification, and Prevention: Analyze the root cause, ensure the problem isn’t present elsewhere, and implement measures to rectify customer situations and prevent future occurrences.

Conclusion

Our discussion underlined the importance of a proactive approach to compliance. Understanding the ins and outs of reportable situations enables businesses to act swiftly and effectively, ensuring they uphold the standards expected by regulators and customers alike.

For those who missed our round table, we hope this blog post provides you with a concise understanding of reportable situations in the compliance landscape. Keep an eye out for our future sessions, where we’ll continue to share valuable insights on these critical topics.

 

If you’re interested in a more comprehensive look at the topics discussed, the presentation slides from our “Compliance in Action” round table are available for download.

Download Presentation Slides

For personalized guidance on compliance matters, Curium and Gilchrist Connell are here to help. Click below to get in touch with our experts.