ASIC’s penalty structure lags globally


Australia’s corporate regulator is severely limited in the range and severity of penalties it can hand out for wrongdoing - particularly compared to the US and UK, a review has concluded.
The Australian Securities and Investments Commission (ASIC) could be letting the public down due to its restrictions on prison terms and fines, the regulator’s first penalty structure review in more than a decade has concluded.
US regulators are able to dole out significantly longer prison terms for similar crimes, the review found, with sentences of up to 20 years for insider trading, market manipulation and fraud.
In Australia, ASIC can inflict maximum prison terms of up to 10 years, which places it on a par with Canada and Hong Kong.
However, when it came to individual fines, penalties for crimes like disclosure and unlicensed conduct are capped at $34,000, compared with more than $5 million for Canada and the US, or unlimited in the UK.
Unlike its global counterparts, ASIC also does not have a disgorgement penalty at its disposal, which would force wrongdoers to pay back penalties earned dishonestly.
Commenting on the review, 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”.
The findings from the REP 387 review will be presented to the Financial System Inquiry.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.