ASIC reviews its penalties

by |
Australian Securities and Investment Commission admits its penalties have not been comprehensively reviewed for over a decade and, in many cases, do not meet community expectations.

Since conceding this in its submission to the Senate Inquiry into ASIC’s performance – of which the reporting date is 30 May – the regulator yesterday released a report reviewing penalties in Australia for corporate wrongdoing to assess whether they are proportionate and consistent.

It compares ASIC’s penalties across its regime with those of other countries and other Australian regulators.

The report shows while ASIC’s maximum criminal penalties – jail and fines – are broadly consistent with those available in other countries, there are significantly higher prison terms in the US, and higher fines in other overseas countries for certain offences.

There is a broader and tougher range of civil and administrative penalties in other countries, including the ability to remove financial benefit from wrongdoing.

In comparison to other Australian regulators, the maximum civil penalties available to ASIC are lower than those available to other regulators and are fixed amounts, not multiples of the financial benefits obtained from wrongdoing.

And across ASIC’s own regime, there are differences between the types and size of penalties for similar wrongdoing.

For example, providing credit without a licence can attract a civil penalty up to ten times greater than the criminal fine for those who provide financial services without a licence.

“Effective enforcement is critical for ASIC in pursuing our strategic priorities of promoting fair and efficient financial markets and ensuring confident and informed investors and financial consumers. It depends on outcomes that genuinely deter corporate wrongdoing,” ASIC chairman Greg Medcraft said.

“The public expects ASIC to take strong action against serious corporate wrongdoers. Those who break the law and cause severe damage should face tough penalties. This will make them and others think twice about breaking the law.”

While tough penalties have a powerful deterrent effect, at the lower end of the scale, more proportionate sanctions such as infringement notices can work better, he said.

The findings in the report will inform ASIC’s submission to the government’s Financial System Inquiry.


Another cancelled license: ASIC slams Sydney advisory

ASIC’s huge week of fines, freezes and jail

Finance manager banned by ASIC