- Jail terms of up to 10 years for senior executives found guilty of dishonesty or using their position for personal gain or providing defective disclosure documents to consumers.
- Fines of up to $200 million or 10% of a company’s annual turnover.
- And five years jail for providing false or misleading information to ASIC.
Companies will face fines of more than $200 million and their senior executives 10 year jail terms for corporate wrongdoing under reforms announced by the Federal Government.
The announcement today includes changes to the Corporations Act to increase penalties for serious offences and gives greater powers to the corporate regulator ASIC to ban individuals and revoke licenses.
The penalties include a fine equivalent to 10% of a company’s annual turnover and a five year jail term for making a false statement to ASIC.
Offences carrying a ten year prison term include dishonest conduct as a director, officer or employee of a company, using a position as a director for personal gain, and providing defective disclosure documents to consumers.
Treasurer Scott Morrison says the issues raised at the financial services royal commission go to the behaviour and culture of companies.
“And what we’re announcing today is further action that we have been taking to address that,” he says.
“The punishment must always fit the crime.”
The increased penalties announcement came as the CEO of AMP, Craig Meller, stepped down as the financial giant apologised for its conduct, including misleading the corporate regulator ASIC over the fee for no service issue.
The revelations in the financial services royal commission have exposed details of scandals involving financial planners giving conflicted advice or no advice at all and still charging a fee.
Morrison called attention to the boards of directors of companies as guardians of governance.
“It’s not just chief executives here,” says Morrison.
“Boards of these organisations are the custodians, really, of the governance, and I am sure that that will have plenty of attention, as the commission carries on its important work.”
He praised Royal Commissioner Kenneth Hayne, a former High Court judge.
“Commissioner Hayne is running a very tight ship, and he’s doing an outstanding job with the support of his counsel and others who are working there,” says Morrison.
“We need to let him work through that evidence and provide recommendations to the government, which is his task under his terms of reference.”
The latest reforms to ASIC’s powers and penalties follow recommendations made by the ASIC Enforcement Review Taskforce established in October 2016 in response to the Murray Financial System Inquiry.
Among the 43 offences with significant increases in maximum prison terms include providing false or misleading information to ASIC. The penalty for this will be increase to five years jail from two years.
Here are the proposed criminal penalties:
And the civil penalties:
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