The Australian Securities and Investment Commission (ASIC) chief Greg Medcraft told a legislative inquiry that penalties available to him are insufficient to deter corporate crime.
“There is an expectation among the public that we will take strong action against wrongdoers – and doing this will send a message that shapes future behavior,” Medcraft said.
“However, one of the barriers we face to achieving this is the inadequacy of
penalties. We have outlined some of these inadequacies in our main submission. Some comparable criminal offences currently attract inconsistent penalties. Civil penalties are set too low and are not available for a sufficiently wide range of misconduct.”
“We require a more graduated set of penalties to provide an effective enforcement response in a wider range of cases. We consider that this includes the greater availability of infringement notice powers. It is frustrating – both for us and the public – when the penalty available to respond to misconduct is much less than the profit someone made in the process.”
“If this is so, then rational players in the market will routinely take that risk. If the thinking of lawbreakers is a tussle between fear versus greed, then we need penalties that amplify the fear and smother the greed. We need penalties that create a fear that overcomes any desire to take risks and break the law.”
Medcraft also called for stronger whistleblower protections.
“We are working on improving our dealings with whistleblowers,” Medcraft said. “The changes we are implementing include establishing Whistleblower Liaison Officers within all relevant ASIC teams. Staff from our Misconduct and Breach Reporting team and the Whistleblower Liaison Officers will soon receive new training on awareness of whistleblower protections and handling whistleblower complaints. We will provide better, clearer and more regular communication to whistleblowers during investigations, and we will conduct a stocktake of matters involving whistleblowers, to ensure these are being given appropriate priority.”