Effect of banning orders

Offence title:

Effect of banning orders

Act:

82 National Consumer Credit Protection Act

Offence:

(1)   A person must not engage in conduct that is contrary to a banning order that is in force against the person.

(2)   A person commits an offence if:

(a)   the person is subject to a requirement under subsection (1); and

(b)   the person engages in conduct; and

(c)    the conduct contravenes the requirement.

Penalty:

(1)   – 5,000 penalty units

(2)   – 5 years imprisonment

Summary/Indictable/mixed:

Mixed

Jurisdiction:

Local, District or Supreme Court

How committed:

A banning order preventing a person from engaging in credit activities can be imposed for various reasons and for a specified period, up to and including, life. It can ban for specified activities or all credit activities. The circumstances leading to the banning order being made will govern the duration and breadth of it.

A banning order is made by an ASIC delegate on the basis of information provided by ASIC and a submission by the accused party.

Banning orders may be varied or cancelled, if ASIC considers it appropriate to do so. Variations or cancellations may be instigated by ASIC or by the banned party seeking a review.

The banning order must be served on the party it will restrain, with a copy of the reasons; it is at this time it comes into force. ASIC must publish, on its website, the making of an order including any variation or cancellation of it.

s.80 0f the Act sets out the circumstances under which ASIC will consider making an application for an order and which a delegate may choose to exercise their power to do so, some of the circumstances are listed below:

(a)   if ASIC suspends or cancels a licence of the person; or

(b)   insolvency; or

(c)    a criminal conviction for fraud; or

(d)   contravention of credit legislation or being involved in a contravention by another; or

(e)   if ASIC has a reason to believe the circumstances in (d) above; or

(f)    if ASIC believes a person is not fit and proper to engage in credit services or control another person in the industry; or

(g)   if ASIC believes the person is not adequately trained to engage in credit activity; or

(h)   other circumstances provided for in the regulations.

An example of this may be a mortgage broker who is convicted of fraud and banned for life as a result of the conduct leading to the fraud conviction.

That same mortgage broker, through circumstances, could find themselves back acting as a mortgage broker, going beyond mere administrative duties. This conduct would be in breach of the banning order he was subject to and inevitably lead to a criminal charge.