ASIC will shortly be able to pursue harsher civil penalties and criminal sanctions against banks, their executives and others who have breached corporate and financial services law, after a significant bill passed the Senate last night.
The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 implements recommendations of the ASIC Enforcement Review Taskforce by amending the Corporations Act 2001, ASIC Act 2001 as well as the National Consumer Credit Protection Act 2009 and Insurance Contracts Act 1994. It strengthens existing penalties and introduces new penalties for those who have breached the corporate laws of Australia designed to protect its citizens.
Notable features of the Bill include:
- maximum prison penalties for the most serious offences will increase to 15 years. These include breaches of director’s duties, false or misleading disclosure and dishonest conduct;
- civil penalties for companies will significantly increase, now to be capped at $525 million;
- maximum civil penalties for individuals will increase to $1.05 million and can also take in to account profits made;
- civil penalties will apply to a greater range of misconduct, including licensee’s failure to act efficiently, honestly and fairly, failure to report breaches and defective disclosure.
The Bill will return to the House of Representatives.
‘The passing of the penalties bill is a significant step for ASIC’s enforcement regime. The legislation is the culmination of ASIC’s recommendations to Government to increase penalties and provides the legislative reform to ensure breaches of the law are appropriately punished,’ said ASIC Deputy Chair Daniel Crennan QC.
‘Without this bill very significant aspects of the law lacked sufficient penalties to properly punish corporate wrongdoing in Australia. In part, the core obligations owed by banks and other financial services licensees to the citizens of Australia did not carry any penalties.’
‘ASIC will now be in a stronger position to pursue harsh civil penalties and criminal sanctions against those who have breached the corporate laws of Australia,’ concluded Crennan.
Further bills, related to superannuation, also passed the Senate last night. The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 includes important improvements to ASIC’s powers to take action against trustees that use goods or services to influence employers decisions about their employees superannuation.
On 19 October 2016, the Government set up the ASIC Enforcement Review Taskforce.
The Taskforce was in response to the Financial System Inquiry and was asked to review ASIC’s enforcement regime and assess the suitability of the existing regulatory tools available to ASIC to perform its functions.
The Taskforce provided its report to the Government in December 2017, where it made 50 recommendations to enhance ASIC’s ability to prevent harm and promote a competitive and stable financial system.
Some of the recommendations included:
- improving ASIC’s ability to gather information
- strengthening ASIC’s licensing and banning powers
- increasing penalties for corporate misconduct
- encouraging greater use of industry codes of conduct.