The Treasury Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Bill), which introduces stronger penalties for corporate and financial sector misconduct, has been passed by the Senate. The Bill implements recommendations of the ASIC Enforcement Review Taskforce and will amend the Corporations Act, ASIC Act, National Consumer Credit Protection Act (and Credit Code) and the Insurance Contracts Act. While the Bill still needs to be formally approved by the House of Representatives, this is seen as a formality only.
Generally, the Bill proposes various changes to penalties contained in the above mentioned legislation, including:
- increasing maximum imprisonment penalties for certain criminal offences to 15 years (this includes breaches of director’s duties and dishonest conduct);
- expanding the number of offences subject to civil penalty provisions (including a licensee’s failure to act ‘efficiently, honestly and fairly’ and failure to report breaches);
- increasing the financial penalty amount (civil penalties for companies will now be capped at $525 million and penalties for individuals are also being increased); and
- ensuring Courts give priority to victim compensation over ordering payment of financial penalties.
ASIC has stated that the new penalty regime is intended to place ASIC in a ‘stronger position to pursue harsh civil penalties and criminal sanctions’ against those engaging in corporate and financial misconduct.
Awareness of the increasing penalties will be particularly relevant following the Financial Services Royal Commission recommendations and government responses (found here and here, respectively) which will likely have an impact on regulatory enforcement. Further information can be found here.