Now that the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 has passed both houses, ASIC will soon have expanded abilities to pursue misconduct in the financial services sector.
ASIC deputy chair Daniel Crennan described the bill passing as a “a significant step for ASIC’s enforcement regime.”
“The legislation is the culmination of ASIC’s recommendations to Government to increase penalties,” he continued, “and provides the legislative reform to ensure breaches of the law are appropriately punished.”
So what does the bill entail?
Civil penalties for misconduct
The range of misconduct subject to civil penalties has been widened to include a licensee’s failure to “act efficiently, honestly and fairly,” failure to report breaches and what the regulator describes as “defective disclosure.” (This includes Financial Services Guides and rights issues.)
Maximum civil penalties have been increased to $525 million for companies and $1.05 million.
Serious offences, including breaches of director’s duties and false or misleading disclosure, have been increased to 15 years in prison.
The law further stipulates that the maximum financial penalties for instances where the maximum term of imprisonment is less than 10 years “is calculated by multiplying the maximum term of imprisonment in months by 10 for individuals, and by a further 10 for bodies corporate.”
What this all means
It’s worth noting this bill passed the Senate not long after the release of the final Royal Commission report, which criticised aspects of ASIC’s past conduct and noted that “ASIC does not perform its functions as a service to those entities and it is well‑established that ‘an unconditional preference for negotiated compliance renders an agency susceptible to capture’ by those whom it is bound to regulate.”
Giving ASIC greater powers to penalise misconduct could be seen as an initial response to these findings.
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here.
12 September, 2019
10 September, 2019
Here's what you need to know.
02 July, 2019
Product intervention powers are now open for consultation. Find out more here.