Banks in sight as Senate approves ‘harsh’ penalty powers

The federal government has announced that the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2017, designed to enshrine new criminal and civil penalties for corporate and financial sector misconduct has passed the Senate and will progress to the House of Representatives for approval before ratification.

The legislation, which builds on recommendations from the Enforcement Review Taskforce of the Australian Securities and Investments Commission (ASIC), would increase the maximum prison sentence for criminal misconduct by individuals to 15 years imprisonment, and/or the greater of $945,000 or three times the benefit gained/loss avoided.

Penalties for criminal misconduct by corporations would also increase from a fine of $210,000 to the greater of $9.45 million or three times the benefit gained/loss avoided or 10 per cent of annual turnover.

Further, if ratified, the legislation would lift civil penalties for misconduct by individuals from a fine of $200,000 to the greater of $1.05 million or three times the benefit gained/loss avoided, while civil penalties for misconduct by corporations would increase from $1 million to $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 20 years,” Treasurer Josh Frydenberg said.

“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.”

ASIC welcomed the news and said that it is committed to using its new powers once the legislation is enshrined into law.

“The passing of the penalties bill is a significant step for ASIC’s enforcement regime. The legislation is the culmination of ASIC’s recommendations to government to increase penalties, and provides the legislative reform to ensure breaches of the law are appropriately punished,” ASIC deputy chair Daniel Crennan said.

“Without this bill, very significant aspects of the law lacked sufficient penalties to properly punish corporate wrongdoing in Australia. In part, the core obligations owed by banks and other financial services licensees to the citizens of Australia did not carry any penalties.

“ASIC will now be in a stronger position to pursue harsh civil penalties and criminal sanctions against those who have breached the corporate laws of Australia.”

[Related: ASIC to update responsible lending guidance]