Industry has second highest self-reported breaches: ASIC

General insurance has the second highest number of self-reported breaches after credit activity, according to the Australian Securities and Investments Commission (ASIC).

The industry lodged 1708 reports to ASIC, accounting for 19% of more than 8000 breaches identified by Australian financial services (AFS) licensees and Australian credit licensees between October 1 last year to June 30.

Credit activity had 3376 breaches, or 38% of overall non-compliance matters submitted to ASIC.

“The reportable situations regime is a cornerstone of the financial services regulatory structure,” ASIC said in its first publication of information lodged under the regime.

“Reports lodged under the regime are a critical source of regulatory intelligence for ASIC. If lodged in a timely manner, they help ASIC detect significant non-compliant behaviours early, take action where appropriate, and identify and address emerging trends of non-compliance in the industry.”

The report from ASIC follows the commencement of the reportable situations regime in October last year requiring AFS and credit licensees to inform the regulator of breaches relating to “specific matters”.

The report says by product line, home loans dominated with 2185 cases lodged or 25% of breaches, followed by motor vehicle insurance with 1112 cases or 13%.

Home building insurance placed fifth (389 cases or 4%) and home contents insurance ranked sixth (285 cases or 3%).

The report provided no breakdown of breach issue by licensee type but notes false or misleading statements was the most common matter for all cases lodged.

About 83% of reports specified at least one root cause for the breaches. The most common category of root cause selected was staff negligence or error (60%), followed by policy or process deficiencies (9%) and system deficiencies (6%).

ASIC says its priorities this financial year include focusing on ways to improve the operation of the reportable situations regime.

“We will continue to work with stakeholders to address issues that have arisen from implementation of the regime, including by providing additional guidance where needed,” Commissioner Sean Hughes said.

“Greater alignment of reporting practices by licensees will facilitate the publication of more comparative data at the licensee level in coming years.”

Click here for the report.