On 23 October 2017, the Commonwealth Government released an exposure draft of the Treasury Laws Amendment (Whistleblowers) Bill 2017 which contains significant reforms to Australia’s private sector whistleblower laws.
The new regime will offer protection to whistleblowers in the corporate, financial and credit sectors and will introduce new protections for tax whistleblowers.
The proposed legislation will create a single comprehensive regime under framework of the Corporations Act 2001 (Cth). It is intended to consolidate and replace the current multiple whistleblower protection regimes in the corporate, banking, insurance and superannuation sectors and which apply under:
- Banking Act 1959 (Cth)
- Insurance Act 1973 (Cth)
- Life Insurance Act 1995 (Cth); and
- Superannuation Industry (Supervision) Act 1993 (Cth)
In addition, it seeks to introduce new protections for whistleblowers in the data collection and consumer credit sector and to protect those who expose tax misconduct.
Summary of Proposed Regime
The Bill expands the class of “eligible whistleblower” protected under the proposed regime. Eligible whistleblowers will be entitled to immunity in respect of information that they disclose.
The agencies to whom whistleblowing conduct or protected disclosures may be reported may include ASIC, APRA or the AFP. In addition, the class to whom prohibited conduct can be reported also extends to senior officers, auditors and whistleblower officers of a company or superannuation fund. The Bill also contemplates the extension of the protection to disclosures to the media and members of Parliament subject to specific criteria.
Importantly, the Bill proposed stronger protections for a whistleblower by imposing strict obligations to maintain the confidentiality of a whistleblower’s identity. Substantial penalties will be imposed on individuals and companies who reveal a whistleblower’s identity without consent and whistleblowers will have expanded access to compensation.
In addition, there is a positive compliance obligation which will apply to all public companies and large propriety companies requiring them to have a formal whistleblower policy and imposing a penalty for non-compliance.
The scope of reported disclosures will be expanded to include suspected contraventions of prescribed Commonwealth laws and allow for anonymous disclosures.
A separate tax regime will be introduced to provide protections for whistleblowing on tax matters.
Misconduct captured by the whistleblower protection rules
The categories of protected disclosures that will be captured under the regime will be expanded to capture fraud or serious misconduct, improper affairs or a serious breach or offence against the following Commonwealth Acts:
- Australian Securities and Investments Commission Act 2001
- Banking Act 1959
- Financial Sector (Collection of Data) Act 2001
- Insurance Act 1973
- Life Insurance Act 1995
- National Consumer Credit Protection Act 2009
- Superannuation Industry (Supervision) Act 1993
Scope of Whistleblowers Protected
The Bill expands the definition of “eligible whistleblower” to include former officers, employees and contractors and associates of a regulated entity.
The current requirement for a whistleblower to make a report ‘in good faith’ will be modified to create a broader and less onerous test that an”eligible whistleblower” must have “reasonable grounds” to suspect misconduct or improper circumstances without a requirement to prove the whistleblower is acting in good faith in coming forward.
Passage of Legislation
The Commonwealth Government intends to introduce draft legislation into Parliament in December 2017.
If the Bill is passed, it is expected to come into effect and apply to the private sector by 1 July 2018.
Steps for Compliance
The Bill is designed to strengthen legislative protections, to expand the circumstances in which a whistleblower may report misconduct, statutory breach or fraud, to facilitate the reporting of suspected misconduct or improper circumstances and to prompt companies and organisations to improve their whistleblower policies and procedures.
Meridian can assist and advise private organisations in the corporate, financial and credit sectors on the potential scope and application of the Bill and the new whistle-blower regime including:
- development and implementation of relevant disclosure frameworks
- preparation of whistleblower policies
- handling complaints relating to misconduct, improper affairs or serious breach of statutory obligations.
For further information or advice on the Whistleblower Regulatory Framework please contact Financial Services and Corporate Advisory Principal Michael Bracken or Commercial Litigation and Dispute Resolution Consultant Catherine Osborne.