The corporate regulator has said the current definition for whistleblowers in the Corporations Act is too narrow, and may remove incentives for those looking to expose corporate misconduct.
Speaking to the parliamentary joint committee on corporations and financial services last week, ASIC said employees leaking information to regulators are at risk of losing their careers if they are not offered certain protections, such as anonymity.
However, not all are eligible for this due to the narrow definition in the Corporations Act.
“We do feel that there are real limits in the existing legislation that I think has the impact of removing protections in cases where they would be useful,” ASIC commissioner John Price said.
“The most obvious example is former employees. It may well be a situation that an employee decides as a result of the experience they’ve had with a company that the best thing for them to do is seek other employment.
“As soon as you do that you’re outside of the existing test in the Corporations Act.”
In its submission to the committee, ASIC proposed broadening the definition of whistleblowers to include “a company’s former employees, directors and officers and contractors, a company’s current and former financial services providers and their representatives, and a company’s current and former accountants, auditors, unpaid workers and business partners”.
ASIC also said it believes whistleblowers and other employees should receive compensation if they are sacked by their employers.
“The issue that we want to focus on is the victimisation. You can see a scenario where there are two people working side by side, one actually is the whistleblower and the other one knows nothing about what’s going on,” said ASIC senior executive leader, assessment and intelligence, Warren Day.
“Management comes down from up high, thinks there’s a leak and wants to take harmful action against both employees. We would say the second employee, the person who is oblivious, is just as victimised as the first person.”
Elsewhere during the hearing, Joshua Bornstein, Maurice Blackburn director and principal, called for a levy on all ASX-listed companies that would fund a compensation scheme for whistleblowers.
“Whistleblowers should be able to be anonymous and be awarded for their disclosure and still continue in their job if they want to,” he said.
“We all have an interest in enhanced corporate governance. This is about a public good.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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