Draft legislation intended to strengthen penalties for corporate and financial sector misconduct has passed the Senate and is poised to pass the House of Representatives imminently. The legislation will triple maximum prison terms for serious offences to 15 years, with terms also increased for a number of other offences.
The legislation also proposes to significantly increase the maximum civil penalties imposed by the Corporations Act, ASIC Act, Credit Act, Insurance Contract Act and Credit Code. Maximum civil penalties for corporations are proposed to increase from $1 million per contravention to the greater of 50,000 penalty units (currently $10.5 million); 3 times the benefit gained or detriment avoided from the contravention; or 10% of annual turnover (to a maximum of 2.5 million penalty units, currently equivalent to $525 million). The proposed amendments would bring corporate and financial sector civil penalties closer to the civil penalties which apply to contraventions of the Competition and Consumer Act and to the financial penalties which apply to offences under the Corporations Act.
Current media, political and public focus on corporate conduct and regulatory compliance is likely to lead to increased enforcement action in the coming months and years, reinforcing the potential impact of the proposed changes.
Click below for an outline of the proposed changes.
If the draft legislation is enacted, maximum criminal and civil penalties for certain offences and civil penalty provisions under the Corporations Act, Credit Act, Insurance Contracts Act and Credit Code will increase as follows. References are to provisions of the Corporations Act unless stated otherwise.