Australia’s banking watchdog, ASIC, is set to be given a bigger stick to whack miscreant financial services institutions and individuals with.
Thanks to a significant bill that passed by the Senate on Thursday night, ASIC will have new powers to pursue harsher civil penalties and criminal sanctions against banks, their high-ranking executives as well as others that have breached the law.
The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 will grant ASIC new powers as well as strengthening existing ones.
In a nutshell
Here are some of the main features of the bill:
- maximum prison penalties for the gravest offences has been raised to 15 years
- The cap for civil penalties for companies has been raised and will now be capped at $525 million;
- maximum civil penalties for individuals will increase to $1.05 million; and
- civil penalties will apply to a greater range of misconduct, including licensee’s failure to act efficiently, honestly and fairly; failure to report breaches; and defective disclosure.
Last year, ASIC revealed that it took an average of six years (or 2,179 days) for banks to pay customers back after a breach to their systems.
ASIC as well as prudential regulator APRA were criticised in the banking Royal Commission for being too soft on the banks.
They have since pledged to crack down harder on the banks, and Treasurer Josh Frydenberg recently wrote to the heads of ASIC, APRA and the Australian Banking Association outlining his expectation for lasting change within the banking sector.
Earlier this week, ASIC caused a stir on social media for spending $100,000 on a tiny branding change.
ASIC deputy chair Daniel Crennan said the passing of this bill would help ensure that breaches of the law were “appropriately punished”.
“Without this bill very significant aspects of the law lacked sufficient penalties to properly punish corporate wrongdoing in Australia,” he said.
“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,” Crennan said.
The Bill will return to the House of Representatives before it becomes law.
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