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'You can't put a firm in jail': ASIC backs its compliance approach


The corporate regulator has defended its use of enforceable undertakings as a way of effecting “enduring change” despite the public’s desire for a show of strength through criminal prosecutions.

By Jotham Lian 9 minute read
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>Speaking at the ASIC Annual Forum in Sydney, commissioner Cathie Armour, said enforceable undertakings had potential advantages as compared to civil court action including changing the culture at the firm in question, and producing a swifter result, despite community perceptions that it lacked gravitas.

“An enforceable undertaking is many times the most practical way for us to achieve enduring change in a particular sector or particular area,” said Ms Armour.

“It involves us in a whole lot more work frequently than if we pursue a criminal outcome but we are keen to do this because we want a functioning, effective, financial system.

“What we are really talking about is the conduct of the firms that are operating in these industries, now there's been a lot of discussion about individuals going off to jail but if the ecosystem in a firm is leading to poor outcomes, the much more sensible, long-term solution that may not have the immediate emotional response but a much more sensible approach is to actually cure, or try to change the framework at that firm,” she added.

“You can't put a firm in jail but what you can do and what you should do as your first priority is to change the operations and the framework of the firm. I don't think we should be ashamed of us trying to do that, it is part of our core vision.”

Further to enforceable undertakings, ASIC has a range of regulatory and enforcement sanctions and remedies to respond to misconduct in the sector, with a taskforce having completed a review of ASIC’s enforcement regime late last year.

“There are significant parts of our legislation where the penalties are frankly inadequate and that's why there has been a major review on our enforcement powers and penalties,” said ASIC deputy chair, Peter Kell.

“The review has been recently completed and presented to the government and we are very keen to see the outcomes of that review.”

Some of the proposals sets by the taskforce include increasing penalties in the Australian Securities and Investments Commission Act 2001 from 2,000 penalty units ($420,000) for individuals and 10,000 penalty units ($2.1 million) for corporations to 2,500 penalty units ($525,000) for individuals; and, the greater of: 50,000 penalty units ($10.5 million), three times the benefit gained (or loss avoided) or 10 per cent annual turnover for corporations.

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Jotham Lian

Jotham Lian


Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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