On 23 March 2017, the Senate Economics References Committee released its report titled ‘Lifting the fear and suppressing the greed’: Penalties for white-collar crime and corporate and financial misconduct in Australia. The report arose out of a referral by the Senate of the matter of the inconsistencies and inadequacies of current criminal, civil and administrative penalties for corporate and financial misconduct or white-collar crime.

The Report contains four key recommendations in relation to civil penalties and ASIC’s powers, being that:

  • the government consider making infringement notices available to ASIC in relation to breaches of the financial services and managed investments provisions of the Corporations Act;
  • the current level of civil penalties under the Corporations Act 2001 be increased, both for individuals and bodies corporate;
  • civil penalties be set as a multiple of the benefit gained or loss avoided;
  • disgorgement powers for ASIC in relation to non-criminal matters be introduced.

The Report also recommends that the government consider reforms to clarify the evidentiary standards and rules of procedure in civil penalty proceedings, and that ASIC consider ways to enhance the accessibility and usability of the banned and disqualified register.


On 25 November 2015, the Senate made the referral from which the Committee’s report arises, providing the Committee with broad terms of reference encompassing evidentiary standards and penalties for corporate and financial misconduct or white-collar crime. The inquiry automatically lapsed as a consequence of the federal election on 2 July 2016, but was reinstated on 11 October 2016.

The inquiry was provoked in part by commentary from the ASIC Chairman, Mr Greg Medcraft, as to the inadequacy of current penalties. The Report takes as its title Mr Medcraft’s observation that it is necessary to ‘lift the fear and suppress the greed’ in order to deter white-collar criminals.

This inquiry is but one of several into the level of penalties for corporate and financial misconduct in recent years:

  • In March 2014, ASIC released a report on penalties, Report 387: Penalties for corporate wrongdoing, which found that civil penalties in other countries were higher, and that there were differences between the types and size of penalties for similar wrongdoing in the current legislation;
  • In June 2014, the Senate Economics References Committee released its report Performance of the Australian Securities and Investments Commission, which recommended that penalties for contraventions of the legislation administered by ASIC be reviewed;
  • In December 2014, the Financial System Inquiry (FSI) Final Report recommended that the maximum civil and criminal penalties for contravening ASIC legislation should be substantially increased, and that ASIC should be able to seek disgorgement of profits earned as a result of contravening conduct;
  • In December 2015, the ASIC Capability Review was released, but did not address the adequacy or consistency of penalties available to ASIC (which fell outside the Capability Review’s terms of reference);
  • On 19 October 2016, the government announced the terms of reference for an ASIC Enforcement Review Taskforce, which include the adequacy of civil and criminal penalties for serious contraventions relating to the financial system, the need for alternative enforcement mechanisms, and the adequacy of existing penalties for serious contraventions, including disgorgement of profits.

Committee’s views and recommendations

The Committee expressed the view that, broadly speaking, there appeared to be serious inadequacies and inconsistencies in the penalty framework. In particular, the Committee referred to the lack of any increase in the level of the maximum civil penalties under the Corporations Act for individuals and corporations ($200,000 and $1 million respectively) since the introduction of those penalties more than 10 years ago, inconsistencies in the penalties available for similar types of offence, and additional inconsistencies arising from the introduction of new legislative instruments (penalties provided for in recent legislation being considerably higher than those available in relation to similar conduct under older legislation).

The Committee’s most significant recommendations are responsive to concerns expressed by ASIC as to the limitations of its enforcement powers. ASIC submitted that a broader infringement notice regime would provide a useful enforcement tool to respond to less serious misconduct; the Committee’s agreement with that view is reflected in its recommendation that infringement notices be available for breaches of the financial services and managed investments provisions of the Corporations Act. Similarly, the Committee’s recommendation of an increase to maximum monetary penalties in non-criminal cases is in line with ASIC’s concerns, but is also said to reflect general agreement amongst inquiry participants that maximum monetary penalties are currently inadequate. The Report expresses strong support for penalties calculated by reference to the benefit gained or loss avoided, as presently occurs in the United States. The Committee’s recommendations would also see ASIC obtain powers in relation to the disgorgement of profits in civil penalty matters; that measure is also presently being considered by the ASIC Enforcement Review Taskforce.

In addition to the adequacy of the penalty regime, the Committee considered whether the challenges associated with prosecuting white-collar crime and misconduct warranted changes to the “high evidentiary standards which typically apply” (in particular, the Briginshaw test). However, the Committee concluded that the difficulties of proof did not mean that evidentiary standards should be lowered. Accordingly, its recommendation that the government consider reforms to clarify evidentiary standards and rules of procedure does not appear to contemplate radical change. The Committee did, however, express support for the introduction of deferred prosecution agreements.

The Report also addresses at length the adequacy of maximum penalties available in Australia for white-collar criminal offences, in light of those available in similar foreign jurisdictions. However, the Committee expressed the view that current maximum terms of imprisonment for white-collar crime are appropriate, and made no recommendations in that regard.


It is unlikely that any of the Commission’s recommendations will be adopted before the ASIC Enforcement Review Taskforce completes its work. However, the Report adds to the pressure on the government to increase maximum penalties under the Corporations Act and to expand ASIC’s enforcement powers.

If implemented, the proposed changes in the Report would constitute an extensive reform of the civil penalty regime.