One-Off, No-Harm Contraventions No Longer Automatically Reportable: ASIC Eases Burden on Licensees

ASIC has introduced further relief for Australian Financial Services (AFS) and Credit Licensees under the reportable situations regime, significantly reducing the need to report low-value, one-off breaches — particularly those deemed significant by law but which carry no actual harm.

What’s changed?

The ASIC Corporations and Credit (Amendment) Instrument 2025/289 amends ASIC’s existing relief from the requirement to lodge a reportable situation for certain breaches of the misleading and deceptive conduct (MDC) provisions of the Corporations Act.

The major change enacted by that instrument, however, is not the changes it has made to the existing relief for breaching MDC provisions, but new relief from the requirement to report a breach to ASIC of civil penalty provisions (CPP) which meet strict low-impact criteria.

The problem with ‘deemed significance’

Under section 912D of the Corporations Act, breaches of certain laws (core obligations) are automatically deemed significant, and therefore reportable, regardless of impact.

ASIC says this has led to an explosion in low-value reports with limited regulatory intelligence value, including cases where:

• only one client was affected,
• there was no financial loss, and
• the breach was quickly resolved.

The new relief: no loss + one-off = no report

The 2025 amendments provide that licensees do not need to report a contravention of certain CPPs even if deemed to be significant under law if the following conditions are satisfied:

• the breach is a one-off, or part of a single group of similar contraventions;
• no more than 10 clients were affected;
• total actual or potential financial loss is less than $1,000 (regardless of whether remediated);
• the breach has been fully rectified, including any remediation, within 60 days; and
• the breach is not a contravention of specific provisions such as client money reporting or clearing and settlement rules.

In other words, if a breach is minor, does not cause financial loss, and is quickly resolved, it likely does not need to be reported – even if it is technically ‘deemed significant.’

This subtle but crucial shift should materially reduce the volume of reports for inadvertent, low-consequence contraventions – particularly for small licensees and fund managers with otherwise robust compliance systems.

What should licensees do?

Licensees should:

• update their breach reporting procedures to include the new exemption criteria;
• enhance internal triage systems to assess significance based on actual impact, not just statutory deeming;
• ensure fast remediation to take advantage of the 60-day window; and
• keep clear evidence of rectification to justify reliance on the exemption.

Final word

ASIC’s latest relief reflects a more proportionate approach to breach reporting. It rewards prompt remediation and focuses regulatory attention where it matters – on systemic issues and consumer harm.

If your firm is unsure whether a breach qualifies for the exemption, or how to revise your breach reporting framework, please contact Chris Mee at cmee@cnmlegal.com.au or call 07 3211 4010.

This paper is produced as general information in summary for clients and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. CNM Legal asserts copyright over the contents of this document.