The Coalition Government has introduced legislation into Parliament to significantly strengthen criminal and civil penalties for corporate and financial sector misconduct. The legislation will bring our penalties closer to those in other leading jurisdictions and further protect Australian consumers from white collar crime.
Criminal penalties are set to double, from five years to 10 years, in some cases. Civil penalties are due to increase by more than tenfold for corporations and more than fivefold for individuals.
For example, if a court currently found a corporation guilty of making false or misleading statements in relation to charging fees for no service, a criminal penalty of up to $210,000 could be imposed. If the breach occurred under the new laws, however, the court could impose a penalty of up to $1.26 million for each offence. In other words, if the corporation is found guilty of making false or misleading statements 25 times, they could face a maximum penalty of $31.5 million.
The legislation introduced by the Government will also expand the range of contraventions subject to civil penalties as well as give the courts the power to seek additional remedies to strip wrongdoers of profits illegally obtained or losses avoided.
For example, if a court currently found a corporation had breached its duty to provide financial services efficiently, honesty and fairly by continuing to deduct insurance premiums from members’ accounts after they have died, there is no penalty apart from taking licensing action. If the breach occurred under the new laws, however, depending on the size of the corporation, it could face a maximum penalty up to $210 million.
The legislation is based on recommendations from the Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce and builds on actions the Coalition Government has already taken to further protect Australian consumers, including:
- providing $70.1 million in additional funding to ASIC to bolster its enforcement capabilities;
- appointing a new ASIC Chair and a second Deputy Chair with a focus on enforcement; and
- establishing a new one-stop-shop for external dispute resolution.
A strong corporate and financial sector which is held to account is part of the Coalition Government’s plan for a stronger economy.