Peter Clark, the Senior Counsel assisting the Australian Securities and Investments Commission in implementing the recommendations of the HIH Royal Commission, says the insurance industry should take on board the lessons learned from the collapse of HIH, because the regulator is now ready to take on any business that attempts to breach the law.

Speaking at the Australian Professional Indemnity Group symposium in Melbourne on Friday, Mr Clark said the regulators now have the “capacity and wherewithal to unravel even the most complex of transactions”.

“The criminal law provides a smorgasbord of offences which can be used as vehicles for prosecution,” he said. “As often said, don’t do the crime unless you’re prepared to do the time.”

He said while he couldn’t speculate on criminal proceedings, the industry should “watch this space” for future court action connected with the collapse of HIH.

Mr Clark says companies need to be aware of the risks. “Essentially what you have to worry about is how others will judge your conduct, and how your actions can affect consumers.

“If one of your own employees is breaching the law – and you’ve allowed them to be in a position to do that – then you could be in a lot of trouble.

“No matter how hard you try to disguise a corrupt payment or what lengths you go to give such a payment an outward appearance of legitimacy, you are at risk.”

Mr Clark told the symposium that when misconduct is identified, it is important for companies to publicly acknowledge the issue, rather than merely focusing on damage control. “Blind Freddy could see that advertising does little to help you if you’ve been involved in misconduct. You need to admit the misconduct. My warning would be: don’t do the crime if you don’t want the time.”

Financial reinsurance contracts could be a key focus for the regulators in the near future. “It’s all very well and good to say, ‘we’ve been doing this for 20 years and our clients have never questioned us’,” Mr Clark said. “But the fact of the matter is the regulator has the disposal of the criminal law at their beck and call and they are looking into such contracts.”