Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) There is a reportable situation in relation to a financial services licensee if one of the following paragraphs is satisfied:
(a) the financial services licensee or a representative of the financial services licensee has breached a core obligation and the breach is significant;
(b) the financial services licensee or a representative of the financial services licensee is no longer able to comply with a core obligation and the breach, if it occurs, will be significant;
(c) the financial services licensee or a representative of the financial services licensee conducts an investigation into whether there is a reportable situation of the kind mentioned in paragraph (a) or (b) and the investigation continues for more than 30 days;
(d) an investigation described in paragraph (c) discloses that there is no reportable situation of the kind mentioned in paragraph (a) or (b).
(2) There is also a reportable situation in relation to a financial services licensee if:
(a) in the course of providing a financial service, the financial services licensee or a representative of the financial services licensee has engaged in conduct constituting gross negligence; or
(b) the financial services licensee or a representative of the financial services licensee has committed serious fraud; or
(c) any other circumstances prescribed by the regulations for the purposes of this paragraph exist.
(3) Each of the following is a core obligation :
(a) an obligation under section 912A or 912B, other than the obligation under paragraph 912A(1)(c);
(b) the obligation under paragraph 912A(1)(c), so far as it relates to provisions of this Act or the ASIC Act referred to in paragraphs (a), (b), (c) and (d) of the definition of financial services law in section 761A;
(c) in relation to financial services, other than traditional trustee company services provided by a licensed trustee company--the obligation under paragraph 912A(1)(c), so far as it relates to Commonwealth legislation that is covered by paragraph (e) of that definition and that is specified in regulations made for the purposes of this paragraph;
(d) in relation to traditional trustee company services provided by a licensed trustee company--the obligation under paragraph 912A(1)(c), so far as it relates to Commonwealth, State or Territory legislation, or a rule of common law or equity, that is covered by paragraph (e) or (f) of that definition;
(e) an obligation of a representative of the licensee under the financial services law, so far as it relates to provisions of this Act or the ASIC Act referred to in paragraphs (a), (b), (c) and (d) of the definition of financial services law in section 761A.
(4) For the purposes of this section, a breach of a core obligation is taken to be significant if:
(a) the breach is constituted by the commission of an offence under any law and the commission of the offence is punishable on conviction by a penalty that may include imprisonment for a maximum period of:
(i) if the offence involves dishonesty--3 months or more; or
(ii) in any other case--12 months or more; or
(b) the breach is constituted by the contravention of a civil penalty provision under any law, other than a civil penalty provision prescribed by the regulations for the purposes of this paragraph; or
(c) the breach is constituted by a contravention of subsection 1041H(1) of this Act or subsection 12DA(1) of the ASIC Act (misleading or deceptive conduct in relation to a financial product or a financial service); or
(d) the breach results, or is likely to result, in material loss or damage to:
(i) in the case of a managed investment scheme--a member or members of the scheme; or
(ii) in the case of a superannuation entity--a member or members of the entity; or
(iii) in all cases--a person or persons to whom the financial services licensee or a representative of the financial services licensee provides a financial product or a financial service as a wholesale or retail client; or
(e) any other circumstances prescribed by the regulations for the purposes of this paragraph exist.
(5) Otherwise, for the purposes of this section, a breach of a core obligation is significant having regard to the following:
(a) the number or frequency of similar breaches;
(b) the impact of the breach on the financial services licensee's ability to provide financial services covered by the licence;
(c) the extent to which the breach indicates that the financial services licensee's arrangements to ensure compliance with those obligations are inadequate;
(d) any other matters prescribed by regulations made for the purposes of this paragraph.
(6) Regulations for the purposes of paragraph (4)(b) may prescribe a civil penalty provision to the extent that it relates to the following:
(a) contraventions of specified provisions;