The Treasurer and the Minister for Financial Services have announced significant new penalties for breaches of the Corporations laws and financial misconduct.
NIBA CEO, Dallas Booth said, “The announcement is not a surprise, given the matters that have been revealed in the first two sets of hearings of the Royal Commission.
The announcement follows work undertaken during 2017 by the ASIC Enforcement Review task force.” NIBA had made a series of submissions to discussion papers issued by the Enforcement Review task force.
Financial Services Minister Kelly O’Dwyer said the reforms were about giving ASIC a bigger tool kit to tackle corporate misconduct and the government had appointed a new deputy chairman responsible for enforcement to ASIC.
The penalties will be significant for both individuals and for corporations. For significant breaches of the law, individuals will face fines of up to $945,000 and/or 10 years’ imprisonment and/or a penalty of three times the amount of the benefit derived from the breach.
O’Dwyer said the reforms would protect Australian consumers and ensure those who did the wrong thing would receive the appropriate punishment. “These reforms represent the most significant increases to the maximum civil penalties, in some instances for more than 20 years.”
Companies will face maximum penalties of the larger of $9.45 million, three times the benefit, or 10 per cent of annual turnover.
The Government will also introduce more severe penalties for civil prosecutions.
The announcement also indicates the Government will legislate for “disgorgement” – the ability for ASIC to seek the recovery of any benefits that were gained, or losses that were avoided, as a result of the misconduct and breaches of the law.
The Government has flagged “in principle” changes in a number of other areas, but will wait for the final report of the Royal Commission before finalising its position on these matters. The areas include ASIC’s control over industry Codes of Practice, ASIC’s powers to give directions relating to the operation of companies, and provisions relating to self-reporting of breaches of the law to ASIC.
At this stage it is not clear when the penalties will be implemented. Booth expects that they will most likely apply to any offences that occur after the amending legislation takes effect.