Australian Consumer Law substantiation notices: Your rights

This is Information Sheet 140 (INFO 140). It explains your options if you receive an Australian Consumer Law substantiation notice.

This information sheet tells you:

• why and when we issue substantiation notices
• what you will receive if you are issued with a substantiation notice
• the types of claims or representations covered by substantiation notices
• how to comply with a substantiation notice
• what happens if you don’t comply with a substantiation notice
• what happens if you provide false or misleading information
• what to do if you need more time to comply

Why we issue substantiation notices

ASIC administers the Australian Consumer Law as it applies to the supply of credit and financial services. ASIC has a statutory power to issue a substantiation notice under the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 (ASIC Act).

We may issue a substantiation notice to you if you have made a claim or representation promoting financial services (including credit). The substantiation notice may require you to provide information and/or documents that substantiate the claim or representation, including the quantities and period for which you can supply the financial services.

Alternatively, the notice may require you to provide particular information and/or documents as specified.

What you will receive

If you are issued with a substantiation notice, you will also receive a covering letter, information about service and compliance, and this information sheet. 

Types of claims or representations

Substantiation notices refer to claims or representations made in the promotion of the supply of financial services, which will generally refer to the sale, transfer, issue or acquisition of financial services.

The term ‘financial services’ is defined in section 12BAB of the ASIC Act. You are providing a financial service if you:

• provide financial product advice
• deal in a financial product
• make a market for a financial product
• operate a registered scheme
• provide a custodial or depository service
• operate a financial market or clearing and settlement facility
• provide a service that is usually supplied for a financial product, or
• engage in other conduct specifically included in the financial service definition by the Australian Securities and Investments Commission Regulations 2001.

The term ‘financial product’ is defined in section 12BAA of the ASIC Act and in these circumstances can include:

• securities (such as shares)
• derivatives
• financial investments
• interests in managed investment schemes
• insurance policies
• superannuation
• debentures, or
• credit facilities.

How to comply with a substantiation notice

The substantiation notice will either specify the claims or representations that we require you to substantiate or the kind of information and/or documents that we require you to provide.

If you receive a substantiation notice, you must comply with it within 21 days of ASIC giving you the notice. However, you may apply for an extension to comply with the notice: see How to apply for an extension of time below.

You can comply with the substantiation notice by mailing the information and/or documents requested to the address specified in the notice. Alternatively, we will provide you with a place and contact for you to deliver the information and/or documents in person.

Consult with a legal adviser

You are entitled to consult with your legal adviser about your obligations under the substantiation notice. You may wish to seek advice on the type of information and/or documents that will satisfy the notice, such as narrative explanations, financial information or business books and records. 

Grounds to refuse to provide a document or information

The recipient of a substantiation notice will either be an individual or a body corporate. If you are an individual and consider that supplying certain information or a particular document to ASIC would incriminate you or expose you to a penalty, you may refuse or fail to give information or document on those grounds. You must advise us in your response to the notice if you intend to use those grounds to not provide particular information and/or documents.

What happens if you don’t comply

We can take various actions against you if you refuse to respond to a substantiation notice or if you fail to respond to a substantiation notice within the compliance period. For example, we may:

• issue you with an infringement notice under the Australian Consumer Law
• issue you with a public warning notice under the Australian Consumer Law if we are satisfied that it is in the public interest to do so, or
• commence proceedings against you in a court for the imposition of a civil pecuniary penalty.

Failure to comply with a substantiation notice may result in an infringement notice of up to six penalty units for individuals and 30 penalty units for body corporates.

You could also be subject to the following pecuniary penalties:

• for individuals, three times the benefit obtained
• for body corporates, the greater of:
  • three times the benefit obtained
  • 10% of the annual turnover but no more than 2.5 million penalty units.

Note: See www.asic.gov.au/penalties for more information about penalties, including the value of a penalty unit.

What happens if you provide false or misleading information

When responding to a substantiation notice, you must not give ASIC:

• false or misleading information, or
• documents that contain false or misleading information.

There are limited exemptions to this obligation, such as where you could not have known that the information was false or misleading or if you provide a statement that the information is false or misleading.

We can take various actions against you if you provide false or misleading information or documents in response to the notice. For example, we may:

• issue you with an infringement notice under Australian Consumer Law, or
• commence proceedings against you in a court for the imposition of a civil pecuniary penalty.

Providing false or misleading information may result in an infringement notice of up to 10 penalty units for individuals and 50 penalty units for bodies corporate.

You could also be subject to the following pecuniary penalties:

• for individuals, three times the benefit obtained
• for body corporates, the greater of:
• three times the benefit obtained
• 10% of the annual turnover but no more than 2.5 million penalty units.

What to do if you need more time to comply

If you need more time to comply with the substantiation notice, you have 21 days from when we give you the notice to apply for an extension of time. If we grant you an extension, you must comply with the notice within the extended time period. 

How to apply for an extension of time

Applications for an extension of time to comply with the substantiation notice must be made in writing within 21 days of receiving the notice. Your application must set out your reasons for requesting an extension of time.

You can email or mail your application to us at:

Email: Substantiation.notices@asic.gov.au

Mail:

Australian Securities and Investments Commission
GPO Box 9827
Melbourne VIC 3001

Our decision on your application

We have the discretion to grant or refuse an application for an extension of time to comply.

Our decisions on these applications are not reviewable by the Administrative Appeals Tribunal.

Where can I get more information?

• Go to www.legislation.gov.au for the general legislative provisions dealing with the Australian Consumer Law substantiation notice regime, which are set out in section 12GC of the ASIC Act.
• Go to www.legislation.gov.au for more information about the statutory obligations imposed on credit and financial services industry participants in the ASIC Act.
• For more information about your rights when you are unhappy with a decision made by ASIC, see Information Sheet 9 ASIC decisions: Your rights (INFO 9).
• Visit our Credit page where you’ll find links to ASIC’s guidance on credit and consumer leases.
• Contact us online or call 1300 300 630.

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.