Australia’s competition watchdog on Monday supported massive increases in financial penalties for companies caught doing the wrong thing, after widespread misconduct was exposed by an ongoing inquiry into the financial sector.
Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said the government was correct to propose penalties of up to 10 percent of turnover, potentially running into hundreds of millions of dollars.
“The penalties we’re getting these days on both competition and consumer matters are tens of millions. We need penalties in the hundreds of millions,” he told state broadcaster the ABC.
“The key bit of the penalty is 10 percent of the turnover – that’s the change we’ve got to make in Australia in relation to not only competition but also consumer penalties so that company boards really sit up and take notice … and don’t just treat it as a cost of doing business.”
His comments came after Prime Minister Malcolm Turnbull admitted he had been wrong to oppose the establishment of the independent judicial inquiry into the scandal-ridden financial sector, whose daily revelations of wrongdoing have shocked the country in recent weeks.
“Politically, all of the commentators are right when they say we would have been right to establish one earlier,” Turnbull said during a visit to Germany, according to the ABC.
The first three weeks of public hearings at the inquiry have been a political embarrassment for the government and a publicity disaster for Australia’s major lenders and AMP Ltd , the country’s largest listed wealth manager.
It has heard of strategies to deceive regulators and cases of people suffering financial distress due to poor financial advice, being charged fees for a decade after they had died and deliberately charged fees for no service.
Sims backed the government’s promise last week to double prison terms for corporate crimes to 10 years, dramatically increase financial penalties from A$10 million ($7.7 million) to up to A$210 million or 10 percent revenue, and ramp up the investigative powers of the corporate regulator.
“I think the banks think of themselves as a protected species,” Sims said.
Australia’s major lenders – Commonwealth Bank of Australia , Westpac Banking Corp., Australia and New Zealand Banking Group, and National Australia Bank – control 80 percent of the lending market and along with AMP, also have the lion’s share of the financial adviser market.
But they now face the almost certain prospect of greater regulation, stricter oversight, higher penalties and possible criminal charges.
“It is now clear to me that the Royal Commission is necessary and justified,” NAB’s CEO Andrew Thorburn said in a statement on Monday morning, ahead of the bank’s own appearance at the inquiry.
($1 = 1.3041 Australian dollars)
(Reporting by Paulina Duran; Editing by Stephen Coates)
Was this article valuable?
Here are more articles you may enjoy.