ASIC’s approach to Civil Penalties – Reshaping General Insurance Conduct

The power of enforcement – ASIC’s perspective

In the Enforcement session opening speech by ASIC Deputy Chair Sarah Court at the ASIC Annual Forum, 13 November 2025, the following example was provided as ‘the power of enforcement.’

I want to start though, with a reflection on ASIC’s enforcement posture.

We are often asked why ASIC needs to take a strong enforcement approach. The suggestion seems to be that we should rather call out the issue of concern, allow the firm involved to remedy it, and avoid the cost and uncertainty of court-based litigation.

Apart from the obvious answer that we are not, and never will be, the compliance arm of large corporations, the following example is telling.

ASIC Commissioners are frequently guests around board tables where we engage with directors and senior executives about the important work that we do.

At one recent such engagement I mentioned a 2023 ‘pricing promises’ case ASIC had taken against insurer RACQ. RACQ ultimately admitted to this misconduct, which involved misleading documents sent on millions of occasions, to nearly half a million customers. They collectively missed out on some $86m worth of discounts. A significant penalty was imposed, and there was widespread media attention.

A woman at the board table was a former senior executive of another insurer.

While that insurer had long been aware of pricing promise issues and the potential for problems of its own, until that point those problems had been secondary. Following this court action, she said the focus changed overnight. There was an immediate review of all pricing promises, whereupon widespread irregularities were discovered.

What was interesting about this swift reprioritisation was the broader industry context. The sector was well on notice of ASIC’s concerns on this issue, and there was widescale remediation in place.

Despite that fact it was only court action against another like firm that finally prompted this insurer to review, reprioritise and remediate. Therein lies the power of enforcement.

Civil penalties as an enforcement action in General Insurance

Over recent time, ASIC has commenced the following Federal Court proceedings seeking civil penalties:

It should be noted that CBus was a superannuation matter..

Legal principles relevant to orders sought by agreement in regulatory proceedings

O’Callaghan J. in Australian Securities and Investments Commission v United Super Pty Ltd [2025] FCA 1453 summarised the position:

[8] There is an important public policy involved in promoting predictability of outcome in civil penalty proceedings. The practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. Such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention.
[9] In civil proceedings there is generally considerable scope for the parties to agree on the facts and upon consequences. There is also considerable scope for them to agree on the appropriate remedy and for the court to be persuaded that it is an appropriate remedy. In terms of the penalty proposed by the parties and to be imposed by the court, there is no single correct penalty, and the determination of the quantum of a civil penalty is not an exact science. The question for the court is whether the penalty agreed and proposed by the parties is an appropriate penalty in the circumstances of the case, rather than the appropriate penalty.
[10] Where the penalty proposed by the parties is within the permissible range, the court will not depart from the submitted figure merely because it might otherwise have been disposed to select some other figure
[11] Subject to the court being sufficiently persuaded that the parties’ agreement as to facts and consequences is accurate and that the penalty which the parties propose is an appropriate remedy in the circumstances, it is consistent with principle and highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty
[12] The regulator in a civil penalty proceeding is not disinterested. That consideration supports, rather than detracts from, the propriety of a court receiving joint (or separate) submissions as to facts and penalty and imposing the proposed penalty if persuaded that it is appropriate. It is the function of the relevant regulator to regulate the industry in order to achieve compliance and, accordingly, it is to be expected that the regulator will be in a position to offer informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance

Civil penalties as a deterrence

In the CBus case, O’Callaghan J. provided the relevant principles for civil penalties as a deterrence [61-65] :

It is well established that deterrence, both specific and general, is the primary purpose of civil penalties and that they are “primarily if not wholly protective in promoting the public interest in compliance”.
A penalty must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”
A penalty must also “attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act”
It cannot be merely the cost of doing business.
The discretion is not constrained by any implication that contraventions be graded on a scale of increasing seriousness, with the maximum to be reserved exclusively for the worst category of contravening conduct.

Application

O’Callaghan J. identified several factors that emphasise the need for penalties that achieve a strong general deterrent effect. While the Cbus case relates to Superannuation, the factors apply equally to General Insurance. The factors are detailed in [67-73], I have summarised them as follows from a general insurance perspective.

criticality – the critical role played by [general insurance] in protecting the assets of individuals and business.
compliance – compliance with [regulatory] duties and obligations has particular importance. [Policyholders and claimants] have a legitimate expectation, and it is a matter of general public importance, that decisions taken by [an insurer] that affect financial outcomes for [insureds] will be soundly and lawfully made.
impact – Delays in the payment of benefits under insurance products can have serious and unacceptable consequences for affected claimants. The penalties awarded need to be significant enough to send a clear deterrent message to dissuade other superannuation fund trustees, and other Australian financial services licensees generally, from failing to discharge their duties diligently by providing financial services efficiently, honestly and fairly.
failure to report – The penalty must also serve to dissuade entities of this kind from failing to report a reportable situation to ASIC within the statutory timeframe.
size and scale – The financial size of the entity has relevance.
remediation and rectification – Failure to take remedial action in a timely manner
general deterrence – the need for general deterrence in this case, as other would-be contraveners need to be left in no doubt that failures of these kinds (including non-compliant systems and processes) will result in significant penalties reflecting the magnitude of the harm they may cause.

Penalty factors

Section 1317G(6) of the Corporations Act provides that, in determining a pecuniary penalty, the court must take into account all relevant matters, including:

(a) the nature and extent of the contravention;

(b) the nature and extent of any loss or damage suffered because of the contravention;

(d) whether the person has previously been found by a court to have engaged in any similar conduct; and

(e) in the case of a contravention by the trustee of a registrable superannuation entity, the impact that the penalty under consideration would have on the beneficiaries of the entity.

[81] However, it is well recognised that the matters the court is to take into account go beyond the express statutory factors. In CSR Ltd at 52,152–52,153, French J set out the following factors, which were endorsed by the High Court in Pattinson at 460 [18], as relevant to consider in determining an appropriate penalty:

(a) the nature, extent and circumstances of the contravening conduct;

(b) the amount of loss or damage caused by the contravening conduct;

(d) the size and financial position of the contravening company;

(e) the degree of power the contravening company has, as evidenced by the company’s market share and ease of entry into the market;

(f) the deliberateness of the contravention and the period over which it extended;

(g) whether the contravention arose out of the conduct of senior management or at a lower level;

(h) whether the contravener has a corporate culture conducive to compliance, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and

(i) whether the contravener has shown a disposition to co-operate with a regulator in relation to the contravention and taken steps to remediate.

[82] Additional factors that may be relevant to penalty include:

(a) the existence within the contravener of compliance systems, including provisions for and evidence of education and internal enforcement of such systems;

(b) remedial and disciplinary steps taken after the contravention and directed to putting in place a compliance system or improving existing systems and disciplining officers responsible for the contravention;

(c) whether the directors of the corporation were aware of the relevant facts and, if not, what processes were in place at the time or put in place after the contravention to ensure their awareness of such facts in the future;

(d) the extent of any profit or benefit derived as a result of the contravention; and

(e) whether the contravener has been found to have engaged in similar conduct in the past.

[83] While it may be useful to have regard to such lists of factors, the majority in Pattinson observed at 460–461 [19] that: It is important, however, not to regard the list of possible relevant considerations as a “rigid catalogue of matters for attention” as if it were a legal checklist. The court’s task remains to determine what is an “appropriate” penalty in the circumstances of the particular case.

[O’Callaghan J. at 112 concluded] having regard to the facts and admissions set out in the SAFA, the considerations set out above, including the statements of legal principle in the authorities regarding the purpose of civil penalties, I agree with the parties’ joint submission that a total penalty of $23.5 million is appropriate in this case.

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