The Turnbull Government will strengthen criminal and civil penalties for corporate misconduct and boost the Australian Securities and Investments Commission’s (ASIC’s) powers, following a week of staggering revelations about the extent of misconduct in the financial services industry by the Royal Commission.
Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O’Dwyer jointly announced the reforms, saying they were needed to protect consumers from corporate and financial misconduct.
The Government would expand the range of contraventions subject to civil penalties under the Corporations Act. It would also increase and harmonise penalties under the Act for the most serious criminal offences to:
- For individuals: (i) 10 years' imprisonment; and/or (ii) the larger of $945,000 or three times the benefits; and
- For corporations: (i) the larger of $9.45 million or (ii) three times benefits or 10 per cent of annual turnover.
The maximum civil penalty amounts imposable by courts would increase to a maximum of:
- The greater of $1.05 million (for individuals, from $200,000) and $10.5 million (for corporations, from $1 million); or
- Three times the benefit gained or loss avoided; or
- Ten per cent of the annual turnover (for corporations).
These reforms would bring Australia’s penalties into closer alignment with international jurisdictions, which Morrison said would “ensure our penalties are a credible deterrent to unacceptable misconduct”.
ASIC’s powers would also increase, with the regulator gaining greater teeth through:
- Being able to seek additional remedies to strip wrongdoers of profits illegally obtained or losses avoided from some contraventions;
- Expanding its ability to ban individuals from performing any role in a financial services company where they are found to be unfit, improper, or incompetent;
- Strengthening its power to refuse, revoke or cancel financial services and credit licences where the licensee is not fit or proper; and
- Boosting its tools to investigate and prosecute serious offences by harmonising their search warrant powers and granting access to telecommunications intercept material.
As the Government scrambles to appear on top of the extensive wrongdoing exposed in this week’s Royal Commission hearings, Morrison said that these reforms were part of broader attempts to improve the financial services industry.
“These reforms come on top of strong Government action to reform our financial services sector to better protect Australian consumers over a number of years,” he said.