Authors Name: 
Jacqueline Williams
Australian National University
Award winner

The Enforcement Regime of the Australian Securities and Investment Commission (ASIC) under Chapter 7 of the Corporations Act: Reform Required

The Australian Securities and Investment Commission (‘ASIC’) seeks to facilitate the fair and transparent performance of Australia’s financial services market, and support the confident and informed participation of investors and consumers in this system. In 2014, the Senate Economics References Committee stated in its report, Performance of the Australian Securities and Investments Commission, that: ‘ASIC’s enforcement role is one of its most important functions. ASIC needs to be respected and feared. It needs to send a clear and unmistakeable message … that ASIC has the necessary enforcement tools and resources and is ready to use them to uphold accepted standards of conduct and the integrity of the markets’ (at xxi). 

In light of this observation, this essay analyses the enforcement options available to ASIC under Chapter 7 of the Corporations Act 2001 (Cth), focussing on the civil penalty provisions. As hybrids between criminal and civil sanctions, civil penalty provisions play an important role in ASIC’s enforcement regime and assist ASIC to uphold the integrity of the financial market. However, analysis of recent cases of corporate wrongdoing demonstrates that ASIC’s civil penalty powers under the Corporations Act fall short when compared to the legislative schemes of other Australian and international financial market regulators.

In order to effectively deter and punish corporate wrongdoing that adversely impacts financial markets and confident market participation, ASIC’s civil penalty powers under Chapter 7 of the Corporations Act need significant reform. Broadening the range and strengthening the level of civil penalty provisions available to ASIC will promote consistency with other regulators’ powers, and enable courts to impose penalties adjusted to the seriousness of the wrongdoing. Clarifying the rules governing procedural and evidential requirements for civil penalty proceedings will further uphold the envisaged role of civil penalty powers within ASIC’s enforcement regime. A stronger civil penalty regime would enable ASIC to deliver better market outcomes by improving the cost-effectiveness of enforcement actions, and maximise their impact and deterrent effect on market participants. Importantly, ASIC must be well-resourced and willing to implement these powers in order to promote public confidence and compliance with the law.