The details of the first civil case in which a civil penalty has been imposed by the court for a licensee failing to report a breach to ASIC since new penalty powers were introduced in 2019 have recently been made public. The Federal Court has imposed a penalty of AU$500,000 on Statewide Superannuation Pty Limited (Statewide) for failing to report a breach to ASIC in the time required by law.

From 2017 to 2020, Statewide provided misleading communications to at least 7,000 fund members representing that they held insurance within their superannuation when, in fact, their insurance cover had lapsed. Statewide also overcharged insurance premiums of at least AU$2.5 million to some members. Statewide failed to report these issues to ASIC within ten days of becoming aware of them, as then required by law.

While the contravention in question relates to the previous breach reporting regime in effect before October 1, 2021, this case is an important reminder that ASIC takes breach reporting seriously, and may take action if a licensee fails to lodge a breach report in time (the reporting timeframe under the new breach reporting regime is now 30 days).

While the circumstances in the Statewide case indicate a clear reportable breach, the answer may not always be clear-cut.

From time to time licensees may be unsure whether or not a breach is a ‘reportable situation’, and in these circumstances it can be helpful to outsource the assessment of the breach to ensure that the strict breach reporting timeframe can be met.