FSC backs stronger misconduct penalties

Last week, government announced plans to reform the Corporations Act to strengthen criminal and civil penalties for corporate misconduct.

In a statement, FSC chief executive Sally Loane said tougher penalties were important to protect customers, and that the council supports the decision.

“There is no place for criminality in the financial services industry and wrongdoing should be met with the full force of the law,” she said.

“It is entirely appropriate that penalties for civil and criminal misconduct are as strong as possible.”

Ms Loane added that increasing penalties for poor conduct would help rebuild trust in the financial services industry.

“Consumers must have confidence that the individuals and organisations they entrust with their savings will act in the right way. Both effective enforcement of the law as well as severe punishments for wrongdoing are central to promoting better trust and confidence.”

The statement comes despite the FSC previously mounting strong opposition to the notion of a royal commission into the financial services industry.

Speaking at a Pritchitt Partners event in Melbourne in July 2017, Ms Loane said a royal commission would prevent self-regulation efforts.

“We are uniquely placed to take up the mantle of consumer reform so that the government can get on with its job of governing,” Ms Loane said.

“Proving as an industry we can regulate ourselves also strengthens consumer trust in the sector. In this light, we are concerned about a proposal that could act as a handbrake on self-regulation.”

Ms Loane said at the time she was concerned that previous inquiries had already cost the industry $3 billion.