We shared the Taskforce’s concerns that the penalties in the legislation administered by ASIC are not currently effective and they do not reflect community perceptions as to the seriousness of engaging in certain forms of misconduct. In order for ASIC to effectively carry out its regulatory role it needs to have broad and effective enforcement tools. We strongly supports most of the proposed penalty increases. The current penalty regime is clearly not acting as a sufficient deterrent for financial service providers that are engaging in misconduct. It appears that many major players have simply made a business calculation that continued misconduct and contravention of the consumer protections outlined in the Corporations, NCCP and ASIC Acts is more profitable even with the risk of ASIC enforcement. This is why in addition to supporting increased civil penalties we strongly support ASIC being able to seek disgorgement remedies in civil penalty proceedings. In fact, we agree with ASIC that disgorgement should be available not only in civil penalty proceedings but in other civil proceedings brought by ASIC for contraventions of the legislation it administers (Position 10). The proposed penalty increases are quite significant, and we believe are completely justified in light of the types of financial services misconduct Australia has witnessed in recent years. Financial Rights is particularly supportive of extending civil penalty consequences to insurers that contravene certain obligations under the Insurance Contracts Act (Position 14).
