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Payment Times Reporting Regulator issues first ‘Failure to Comply’ notices

Failure To Comply

Entities need to be aware of the “significant reputational risks” associated with failure to comply with the Payment Times Reporting Act says KPMG Australia, as the Payment Times Reporting Regulator issues its first ‘Failure to Comply’ notices.

KPMG’s Vince Dimasi, Natalie Brand and Roberta Liddle say that the Payment Times Reporting Regulator appears to be increasing its compliance focus with its December 2023 inaugural list, which includes seven organisations – such as large ASX-listed corporations – who have received and not responded to a ‘Failure to Comply’ notice.

Under the Act, which came into effect on 1st January 2021, entities with over $100 million in turnover are required to report their small business supplier payment terms and practices to a central government database.

It aims to improve payment outcomes for small businesses by creating transparency around the payment practices from large businesses to small suppliers, while giving small businesses access to information on reporting entities’ payment performance that enables them to make a more informed decision about their potential customers.

The Act also allows the Regulator to publish a public notice if it believes an entity has not met its reporting obligations, with the notice including identifying information such as entity name, ABN and ACN, and details of non-compliance.

Entities are alerted of their non-compliance by the Regulator prior to publication of the notice and are given a 28-day period to submit their case.

In the January 2024 update, Mary Jeffries, Payment Times Reporting Regulator said, “Late last year and for the first time since the Scheme began, I published ‘Failure to Comply’ notices on the Payment Times Reporting Register. I will continue to use my regulatory powers to improve compliance outcomes where necessary”.

The update addressed the ‘high incidence’ of late reports and warned of compliance and enforcement action by the Regulator if reports are not submitted within three months of the end of a reporting period – with no time extension granted for entities who exceed this time period.

KPMG reports observing numerous media articles which referenced and also named the seven entities, with the notices staying on the public register even after non-compliance issues are resolved, leading to the potential for significant long-term reputation damage.

It also notes that information about non-compliance may be used in subsequent enforcement actions, which include investigations, audits and other Regulator publications.

To avoid Failure to Comply notices, KPMG says entities must ensure internal processes are in check, preparations of submissions are made before due dates, and they are up to date on the latest guidance material which will be crucial for ongoing compliance in 2024.

PASA Connect members will get a regular PTRA update from KPMG shortly. Check the member calendar for further details.

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