New penalties for banking misconduct pass Senate after Labor back-flip

Criminal and civil penalties for corporate and financial sector misconduct are set to significantly increase, following a Labor Party back-flip and passage of legislation through the Senate. The legislation will now go to the House.

The legislation builds on recommendations from the Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce which included Treasury, ASIC, the Attorney-General’s Department, the office of the Commonwealth Director of Public Prosecutions and an expert group drawn from a range of stakeholders including consumer groups and academia with expertise in corporations, consumer, financial and credit law.

After doing nothing for six years in government to better protect Australian consumers from corporate and financial sector misconduct, Labor suddenly – and without consultation – pulled another political stunt by seeking to uncap the maximum civil penalty for corporations.

Upon realising the recklessness of their idea this week, Labor back-flipped, shelving their plan.

With Labor having already delayed the passage of the legislation by almost three months, the Government has put the interests of Australian consumers first and supported the passage of this legislation in the Senate.

In relation to maximum criminal penalties:

Old New
Individuals
5 years imprisonment and/or $42,000 15 years imprisonment and/or the greater of $945,000 or three times the benefit gained/loss avoided
Corporations
$210,000 The greater of $9.45 million or three times the benefit gained/loss avoided or 10 per cent of annual turnover

In relation to maximum civil penalties:

Old New
Individuals
$200,000 The greater of $1.05 million or three times the benefit gained/loss avoided
Corporations
$1 million $10.5 million or three times the benefit gained/loss avoided or 10 per cent of annual turnover
(capped at $525 million)

The increased penalties include increases to penalties that haven’t changed in more than twenty years. The range of contraventions subject to civil penalties will also now expand and the courts will be given the power to seek additional remedies to strip wrongdoers of profits illegally obtained or losses avoided.

A strong corporate and financial sector which is held to account is part of the Coalition Government’s plan for a stronger economy.

/Public Release.View in full here.