The financial industry should expect harsher penalties from the corporate regulator. This follows the Royal Commission hearings, where Chair of the Australian Securities and Investment Commission, James Shipton, said ASIC’s position going forward will be one of ‘why not litigate?’
In addition, ASIC announced last Friday that they will soon be able to pursue harsher penalties and criminal sanctions against banks, after the passing of the amendments to the Corporations Act, the National Consumer Credit Protection Act and Insurance Contracts Act on Thursday night—amendments based on the recommendations of the ASIC Review Taskforce.
ASIC Media Tweeted ASIC Deputy Chair Daniel Crenan:
“Now ASIC can pursue extremely harsh sanctions against banks & their executives.”
According to the regulator, the notable features include:
An increase to the maximum prison penalties for the most serious offences to 15 years. These include breaches of director’s duties, false or misleading disclosure and dishonest conduct;
Significant increases in civil penalties for companies, to be capped at $525 million;
An increase in maximum civil penalties for individuals to $1.05 million, which will also take into account profits made; and
A greater range of applications of misconduct civil penalties, including licensee’s failure to act efficiently, honestly and fairly, failure to report breaches, and defective disclosure.
In an official release from the regulator last Friday afternoon, Crenan said, “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.”
The recommendations from the Royal Commission are also looking into giving ASIC co-regulatory powers with the Australian Prudential Regulation Authority (APRA) over the Banking Executing Accountability Regime (BEAR), which is to be stretched to all APRA-regulated entities, and the coregulatory model under of the SIS Act.