Draft legislation: Treasury Laws Amendment (ASIC Enforcement) Bill 2018 intended to strengthen penalties for corporate and financial sector misconduct was released by the government for public consultation on 26 September. The proposed changes implement certain of the ASIC Enforcement Taskforce Review recommendations.
Commenting on the proposed reforms, Treasurer Josh Frydenberg emphasised that they significantly increase existing penalties. 'The proposed changes would double maximum imprisonment penalties and significantly increase financial penalties for some of the most serious "white-collar" criminal offences bringing Australia’s penalties in closer alignment with leading international jurisdictions'. He also highlighted that 'The financial penalty for individuals for civil contraventions would also be increased more than five fold, from $200,000 to $1.05 million, or three times the benefit gained (whichever is greatest) from the contravention. Contraveners may also be stripped of ill-gotten gains from their illegal activities'.
Timeline: Consultation closed on 23 October 2018.
Some key points
The Bill proposes to make amendments to ASIC-administered legislation (Schedule 3 to the Corporations Act, and to the ASIC Act and the Credit Act), to increase the maximum imprisonment term for certain criminal offences, including:
- increasing the maximum imprisonment penalties for certain criminal offences;
- introducing a formula to calculate financial penalties for criminal offences;
- removing imprisonment as a penalty and increasing the financial penalties for all strict and absolute liability offences.
Other proposed changes
- Introduces ordinary criminal offences that sit alongside strict and absolute liability offences.
- Modernise and expand the civil penalty regime by increasing financial penalties for contraventions and making a wider range of offences subject to civil penalties.
- Harmonises and expand the infringement notice regime.
- Introduces a new test that applies to all dishonesty offences under the Corporations Act.
- Introduces relinquishment as a remedy available in civil penalty proceedings.
- Clarifies that the courts are to give priority to compensating victims over ordering the payment of financial penalties.
- Clarifies that contraventions of section 184 of the Corporations Act can occur even when the relevant corporation gains an advantage from the contravention.
Treasurer Josh Frydenberg commented: 'The Government is committed to ensuring ASIC is properly armed 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 sectors'.
Response to the proposed reforms
- The Australian Institute of Company Directors (AICD) issued a statement welcoming the consultation on the proposed changes and noting that it has 'long called for stronger criminal and civil penalties for corporate misconduct'. AICD Managing Director & CEO Angus Armour said: 'Tough penalties serve a deterrent effect, and importantly will help restore and retain community trust…The vast majority of company directors in Australia do the right thing. Those that don’t should feel the full weight of the law'. The statement adds that the AICD will provide a submission to the Treasury consultation.
