The head of the consumer watchdog believes penalties of hundreds of millions of dollars for financial misconduct would prevent banks seeing the fines as a cost of doing business.
Australian Competition and Consumer Commission chairman Rod Sims says the financial services royal commission is hearing from bankers who say they want to do the right thing, but that would affect their profits and share price.
“Let’s change the equation. Let’s say you actually have to factor in hundreds of millions of dollars of fines to what you’re doing every day so it actually does matter to the bottom line if you’re caught breaching the Act,” Mr Sims told ABC radio on Monday.
He’s backing changes announced by Treasurer Scott Morrison on Friday of fines up to 10 per cent of annual turnover for corporations or 10 years behind bars for individuals found guilty of misconduct in the finance sector.
The next step is convincing the legal fraternity that while precedent set fines at $10 million-$20 million, parliament no longer believes that’s appropriate.
He said penalties under the Competition and Consumer Act were increased to up to 10 per cent of company turnover in 2007.
“But we have had difficulty convincing the legal fraternity that parliament has actually changed the rules,” he said.