ASIC financial adviser exam, Conduct rules, breach reporting, DDO and AFCA question: A$9,000 loss within a week

ASIC examConduct rules, breach reporting, DDO and AFCA

Petra, an adviser at Willowbank Advice, switches a client into the wrong fund after ignoring two warnings from the platform, and Willowbank considers this gross negligence. Willowbank refunds the client's A$9,000 loss within a week. Under ss912D and 912DAA, Willowbank … (i) has a reportable situation even if Petra breached no core obligation. (ii) need not report to ASIC, because it has already compensated the client.

A (i) True, (ii) True
B (i) True, (ii) False
C (i) False, (ii) True
D (i) False, (ii) False

Show the answer and explanation

Answer: B. (i) True, (ii) False

Statement (i) is true: s912D(2)(a) of the Corporations Act 2001 (compilation 19 Sep 2026) makes gross negligence in providing a financial service a reportable situation in its own right, without any breach of a core obligation. Statement (ii) is false: compensating the client does not remove the obligation to report within 30 days under s912DAA. Remediation and reporting are separate duties.

Common mistake

Fixing the harm does not cancel the duty to report.

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