Appearing before a Senate Joint Committee hearing on Friday, ASIC chairman Greg Medcraft said more needs to be done to encourage whisteblowers to come forward in Australia.
Mr Medcraft said that a 'rewards system' such as the arrangement in the United States would not be appropriate for Australia, given that it represents a 'bounty' culture.
In the US, a whistleblower who provides 'high-quality information' that results in an SEC action with sanctions exceeding US$1 million can receive between 10 per cent and 30 per cent of the money collected.
The US whistleblowing laws in the US have proven very successful, said Mr Medcraft – particularly in the financial and pharmaceutical sectors.
"I don’t think that a rewards system is appropriate for Australia ... but I do think there should be a discussion about compensation when somebody has whistlebown and they have a loss of lifetime earnings as a result," Mr Medcraft said.
The "biggest problem" for a lot of whistleblowers who become aware of poor practices is that speaking up could put their personal finances in jeopardy, he said.
"What we need to do is take that off the table and say ‘Look, you actually won’t be acted detrimentally against as a result of whistleblowing, in fact you will get compensation," Mr Medcraft said.
Companies should also consider rewarding whistleblowers themselves, he added.
"If somebody’s doing the wrong thing that’s affecting your brand, you should be rewarding the whistleblower. Because the wrongdoing is affecting the fundamental value of your business," Mr Medcraft said.
