Treasury has released for consultation a draft Bill which introduces new rules that prohibit schemes designed to avoid the application of a product intervention order (in relation to a credit facility) made under Part 7.9A of the Corporations Act.
This is intended to ensure that a person cannot respond to a product intervention order by engaging in activity that is not covered by the order but results in similar detriment to consumers.
A credit product intervention order means a product intervention order made in relation to a financial product that is a credit facility (covered by paragraph 12BAA(7)(k) of the ASIC Act).
Failure to comply with any of the new prohibitions attracts a civil penalty in accordance with the Corporations Act.
The amendments update the table in subsection 1317E(3) of the Corporations Act where a comprehensive list of civil penalty provisions is included.
For an individual, the maximum pecuniary penalty is the greater of:
• 5,000 penalty units; and
• if the Court can determine the benefit derived and detriment avoided because of the contravention – that amount multiplied by 3.
For a body corporate, the maximum pecuniary penalty is the greatest of:
• 50,000 penalty units;
• if the Court can determine the benefit derived and detriment avoided because of the contravention – that amount multiplied by 3; and
• Either
– 10% of the annual turnover of the body corporate for the 12-month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision; or
– if the amount worked out above is greater than an amount equal to 2.5 million penalty units – 2.5 million penalty units.
A Commonwealth penalty unit is currently $275 each.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
