Earlier this week, ASIC published the second of its reviews into the level of compliance with reporting requirements by major financial institutions, this time  looking at self-reporting of breaches of the Corporations Act. It was however, covering some common ground from the ASIC Enforcement Review Taskforce, which reported in December 2017 on the need for less ambiguity and higher penalties.The Treasury has now followed up with a draft bill to strengthen penalties in ASIC-administered legislation (the Corporations Act, ASIC Act, Credit Act and Insurance Contracts Act) covering corporate and financial sector misconduct.Broadly, the proposed changes: increase the maximum imprisonment penalties for certain criminal offences; introduce a formula to calculate financial penalties for criminal offences; remove imprisonment as a penalty and increase the financial penalties for all strict and absolute liability offences; introduce ordinary criminal offences that sit alongside strict and absolute liability offences; significantly increase the financial penalties for civil contraventions and  give courts discretion to strip contraveners of their ill-gotten gains in civil penalty proceedings - for instance by fining them either the benefit derived or detriment avoided times three, or 10 per cent of turnover, up to a maximum of A$210 million; modernise and expand the civil penalty regime by making a wider range of offences subject to civil penalties; harmonise and expand the infringement notice regime; introduce a new test that applies to all dishonesty offences under the Corporations Act 2001; and ensure the courts prioritise compensating victims over ordering the payment of financial penalties.The reforms implement some of the recommendations of the ASIC Enforcement Review Taskforce, notably the need for much higher penalties, often in conjunction with jail time and where jail time is to be served, it is often boosted by a factor of five under the new regulations. Calculation of fines has added bite, with a punitive formula to be used - in some case increasing the maximum to $210 million, up from $1 million.Other changes called for by ASIC have yet to be considered seriously by lawmakers, for instance, the regular placement of ASIC staff onsite in major financial institutions as part of a new and more intensive supervisory approach. The proposal is expected to be rolled out in the near term and will involve teams of three to 20 ASIC staff being embedded for weeks or months at a time with the Big Four banks and AMP, prompting top tier legal firm Ashurst to warn its clients that the status of legally privileged advice could be compromised.                                                                                                                                                                   "ASIC's expectations in terms of attending Board and committee meetings and whether it will expect to be present during discussion of issues subject to legal professional privilege are not currently clear," Ashurst's lawyers stated.While ASIC may elect to receive voluntarily produced privileged information "on written terms of confidentiality," any such agreement does not prevent a third party from contesting that privilege has been waived generally."There is some case law in support of the proposition that a limited disclosure to ASIC should not amount