Compliance with the Australian Securities and Investments Commission Act (ASIC Act) is a core credit licence obligation under Section 47(1)(d) of the NCCP Act.

Not only does non-compliance with the ASIC Act put the credit licence at risk but it exposes responsible managers to liability to pay a pecuniary penalty under section 12GBA of the ASIC Act (the consumer protection offence provisions) and disqualification from managing corporations under section 12GLD, depending on the circumstances.

Section 12GBD of the ASIC Act makes it an offence for a company to indemnify a liability to pay a pecuniary penalty under section 12GBA or legal costs incurred in defending or resisting proceedings in which the person is found to have such a liability, except in relation to misleading or deceptive conduct under Section 12DA.

Any attempt to do so is void (section 12GBD(4) ASIC Act).

This means that a company cannot indemnify its directors and officers (including responsible managers) for pecuniary penalties and legal costs if they are found personally liable for contraventions of the majority of the financial service consumer protection provisions in the ASIC Act, including unconscionable conduct, false or misleading representations, bait advertising, referral selling, harassment and coercion and unsolicited credit cards and debit cards.

Whether any directors’ and officers’ liability insurance in place for the benefit of directors and officers (including responsible managers) will be effective in these circumstances will depend on the policy wording.