29 May, 2018
In December 2017, the ASIC Enforcement Review Taskforce delivered a report to government on the enforcement regime of the Australian Securities and Investments Commission (ASIC), including the suitability of the existing regulatory tools available to ASIC. The Australian Government responded to the report in April 2018 by agreeing, or agreeing in principle, with all 50 recommendations made by the Taskforce. Key changes on the horizon include:
Increased criminal and civil penalties
Maximum civil penalties to be increased for individuals to 5,000 penalty units or three times the value of benefits obtained or losses avoided, and increased for corporations to the higher of 50,000 penalty units ($10.5 million), three times the benefit obtained/loss avoided, or 10% of annual turnover to a maximum of 1 million penalty units ($210 million), and the introduction of disgorgement remedies in civil penalty proceedings brought by ASIC.
ASIC’s power to ban individuals in the financial sector
ASIC will be given the power to ban individuals from performing a specific function (eg being a senior manager or controller) once an administrative banning power is triggered, and the grounds for exercising that power will be expanded to include circumstances where ASIC has reason to believe that a person is not fit and proper.
ASIC’s direction powers
ASIC will have the power to direct financial services licensees in the conduct of their business where ASIC has reason to suspect a contravention of licensing requirements, and failure to comply with directions may result in civil penalties.
Self-reporting of significant breaches by financial services licensees
The introduction of an objective test to determine whether a breach is ‘significant’, a requirement to report suspected breaches still under investigation, and increased criminal penalties and a new civil penalty for failure to report breaches.
The Australian Government plans to implement some of the recommendations promptly, whilst others will be deferred pending the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. For more details, read our update on the ASIC Enforcement Review – Government Response.
