A new legislation to increase maximum financial penalties under the Australian Consumer Law (ACL) has recently passed the Federal Parliament.

This decision was made in accordance with recommendations of the Consumer Affairs Australia and New Zealand (CAANZ) from the final report on the ACL Review.

The CAANZ recommended penalties for a breach of the ACL be raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months. 

Also, penalties against individuals will also increase from $220,000 to $500,000 per breach.

“Companies will now face more serious financial consequences for breaching consumer law that align with competition law breaches,” ACCC Chair Rod Sims said.

“We have strongly advocated for higher maximum penalties to enable courts to impose more substantial penalties. Penalties need to hit the bottom line so they are not simply seen as the cost of doing business. Perhaps more important, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority,” he added. 

The ACCC expects that increased penalties will deter large companies from breach of consumer laws, and thereby significantly improve corporate behaviour and the Australian economy. 

The highest penalty the Federal Court has ordered so far for breaches of Australian Consumer Law is $10 million (in ACCC actions against Coles and Ford). 

Eunji Cho / info@hanhodaily.com