Way back in
October 2016 the Australian Securities
and Investments Commission (ASIC) began an Enforcement Review which examined the adequacy of legislation
dealing with corporations, financial services, credit and insurance, with
regard to serious contraventions in the financial sector, including fraud and
criminal activity.
This response "agrees" with or gives "in principle agreement" to all 50 recommendations but has placed 20 recommendations on the backburner.
The Turnbull Government
is strengthening criminal and civil penalties for corporate misconduct and
boosting the powers of the Australian Securities and Investments Commission
(ASIC) to protect Australian consumers from corporate and financial misconduct.
These stronger new
penalties will ensure that those who do the wrong thing will receive
appropriate punishment.
These reforms represent
the most significant increases to the maximum civil penalties, in some
instances, in more than twenty years. They bring Australia's penalties into
closer alignment with leading international jurisdictions, and ensure our
penalties are a credible deterrent to unacceptable misconduct.
The Government will
increase and harmonise penalties for the most serious criminal offences under
the Corporations Act to a maximum of:
For
individuals: (i) 10 years' imprisonment; and/or (ii) the larger of $945,000 OR
three times the benefits;
For
corporations: (i) the larger of $9.45 million OR (ii) three times benefits OR
10% of annual turnover.
The Government will
expand the range of contraventions subject to civil penalties, and also
increase the maximum civil penalty amounts that can be imposed by courts, to
the 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
10%
of the annual turnover (for corporations).
In addition, ASIC will
be able to seek additional remedies to strip wrongdoers of profits illegally
obtained, or losses avoided from contraventions resulting in civil penalty
proceedings.
ASIC's powers will also
be significantly increased through:
expanding
their ability to ban individuals from performing any role in a financial
services company where they are found to be unfit, improper, or incompetent;
strengthening
their power to refuse, revoke or cancel financial services and credit licences
where the licensee is not fit or proper; and
boosting
ASIC's tools to investigate and prosecute serious offences by harmonising their
search warrant powers to provide them with greater flexibility to use seized
materials, and granting ASIC access to telecommunications intercept material.
The Turnbull Government
is committed to ensuring ASIC is armed with greater powers to effectively
deter, prosecute, and punish those who do the wrong thing, to improve community
confidence and outcomes for consumers and investors in the financial services
and corporate sector.
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.
The Government has
already provided $127 million in additional funding to ASIC to bolster its
investigative and surveillance capabilities; implemented an industry funding
model for ASIC to give it secure funding; appointed a new chairman for ASIC, Mr
James Shipton, and announced a new second Deputy Commissioner with an
enforcement focus, Mr Daniel Crennan QC; established a new standards setting
body for financial advisers; and established a new one stop shop for consumer
complaints which is free for consumers, binding on financial institutions and
can order compensation where appropriate.
Today's reforms to
ASIC's powers and penalties follow recommendations made by the ASIC Enforcement
Review Taskforce (The Taskforce). The Taskforce was established in October 2016
to fulfil the Government's commitment to review the adequacy of ASIC's
enforcement regime in response to the Murray Financial System Inquiry, and
provided its report to Government in December 2017.
The Government has
agreed, or agreed in principle, to all 50 of the Taskforce recommendations and
will prioritise the implementation of 30 of the recommendations.
The remaining 20
recommendations relate to self-reporting of breaches, industry codes and ASIC's
directions powers, which will be considered alongside the final report of the
Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry.
The Government thanks
all the members of the Taskforce, including the Panel of Experts, Treasury,
ASIC, Attorney-General's Department, Commonwealth Director of Public
Prosecutions, as well as all stakeholders who participated in the consultation
of the various position papers put forward by the Taskforce.
The Government's full
response to the Taskforce Report can be found on the Treasury website.