Director Penalties Under the Australian Consumer Law: Personal Liability Explained

Key Takeaways

• Directors can be personally liable for a company's contraventions of the Australian Consumer Law in certain circumstances.
• Accessorial liability can attach to a person who is knowingly involved in a contravention.
• Courts can make a range of orders against an individual, including civil penalties of up to $2.5 million per contravention and disqualification.
• Active compliance oversight is one of the best protections against personal exposure.
• Early advice matters where a director's personal position may be at risk.

1. 1.How directors become personally exposed
2. 2.Accessorial liability explained
3. 3.The orders and penalties a court can make
4. 4.Common areas of risk under the Australian Consumer Law
5. 5.Step 1: Understand where your business touches the ACL
6. 6.Step 2: Put genuine compliance systems in place
7. 7.Step 3: Keep good records of oversight
8. 8.Step 4: Act promptly if a problem emerges
9. 9.The role of cooperation and early engagement
10. 10.What this means for directors
11. 11.Frequently Asked Questions

Directors can be personally liable for their company's contraventions of the Australian Consumer Law. This guide explains how that exposure arises, the orders and penalties a court can impose and the practical steps a director can take to protect themselves and the business.

How directors become personally exposed

Many directors assume the company carries all the risk and they carry none. Under the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), that assumption can be costly. A company is a separate legal person, and in the ordinary course it bears responsibility for its own conduct. But companies act through people, and where an individual is sufficiently involved in conduct that contravenes the ACL, that individual can be exposed personally. The usual route is accessorial liability.

Accessorial liability explained

Accessorial liability can attach to a person who is knowingly concerned in, or a party to, a contravention. In broad terms it requires that the person knew the essential elements of the contravening conduct and was involved in it. A director who directs, approves or takes part in conduct that breaches the ACL can therefore be named alongside the company.

The two ingredients are knowledge and involvement. A director who is genuinely unaware of, and not involved in, the contravening conduct sits in a very different position from one who knew the essential facts and participated. That is why active oversight and good records matter so much.

The orders and penalties a court can make

Where personal liability is established, the Court has a range of options. They include civil penalties, injunctions restraining future conduct, orders requiring corrective action and in appropriate cases disqualification from managing corporations.

The financial exposure can be serious. For an individual, the maximum civil penalty is $2.5 million per contravention. The corporate maximums are far higher again, set for conduct on or after 28 March 2026 at the greater of $100 million, three times the benefit obtained or 30% of adjusted turnover during the breach period. These are maximums, and the penalty the Court actually orders turns on the conduct and the circumstances. What makes personal liability bite is the combination of a money penalty and the prospect of disqualification. We cover personal exposure more broadly in our overview of director liability.

Common areas of risk under the Australian Consumer Law

Personal exposure for directors often arises around conduct such as:

• Misleading or deceptive conduct, including misleading claims in marketing and sales.
• False or misleading representations about goods, services, price or value.
• Unconscionable conduct in trade or commerce.
• Failures concerning consumer guarantees and warranties.

Where a director set the strategy, approved the representations or knew of problems and let them run, the risk of personal involvement goes up.

Step 1: Understand where your business touches the ACL

Map the parts of the business that engage the Australian Consumer Law: marketing, sales, pricing, terms and conditions, complaint handling. You cannot manage a risk you have not identified.

Step 2: Put genuine compliance systems in place

Active, documented compliance is one of the strongest protections. Clear policies, training, sign-off on marketing claims and a culture where concerns get raised and dealt with. A director who can show genuine oversight stands in a far better position than one who cannot.

Step 3: Keep good records of oversight

Records of board discussions, approvals and the steps taken to verify claims help show the level of knowledge and involvement, or the lack of it. Good governance records help both in preventing problems and in responding to any later investigation.

Step 4: Act promptly if a problem emerges

If a potential contravention comes to light, fix it quickly, including by correcting representations and seeking advice, rather than letting it continue. Conduct that runs on after a director becomes aware of it tends to increase personal exposure, not reduce it.

The role of cooperation and early engagement

Where the ACCC raises concerns that may involve a director personally, how the matter is handled makes a real difference. Cooperation, candour and a willingness to put things right are factors the regulator weighs. A director who engages constructively, through experienced advisers, is generally in a stronger position than one who is evasive or combative. That does not mean conceding every point. It means responding in a measured way, claiming privilege properly where it applies and showing the business takes its obligations seriously.

Early engagement also lets the director's personal position be considered separately from the company's, which matters where their interests are not perfectly aligned. Spotting any divergence early avoids surprises later.

What this means for directors

The corporate structure does not automatically shield a director. Personal liability under the Australian Consumer Law turns on knowledge and involvement, and the best protections are genuine compliance oversight, good records and prompt action when concerns arise. Where a director's personal position may be at risk, early advice from our regulatory and compliance team is important.

Frequently Asked Questions

Can a director be personally liable for the company's breach of the ACL?

Yes, in certain circumstances. A director who is knowingly concerned in, or a party to, a contravention can face accessorial liability personally, separate from the company's liability.

What is accessorial liability?

Liability that attaches to a person who is knowingly involved in a contravention, having known its essential elements. It is the main route by which directors and managers become personally exposed under the Australian Consumer Law.

What orders can a court make against a director personally?

A range, which may include civil penalties of up to $2.5 million per contravention, injunctions, corrective orders and in appropriate cases disqualification from managing corporations.

How can a director reduce their personal risk?

By understanding where the business engages the ACL, putting genuine compliance systems in place, keeping good records of oversight and acting promptly when problems are identified.

Does insurance cover director liability under the ACL?

It depends on the policy and the circumstances, and some penalties may not be insurable. Review your arrangements and take advice rather than assume you are covered.

This is general information, not advice on your situation. If you are concerned about your personal exposure as a director, get in touch or call (07) 4270 8880.

This article is for general information purposes only and does not constitute legal advice and should not be relied on as such. While we take reasonable care to ensure the accuracy of the information provided, we make no representations or warranties as to its completeness, currency or reliability. We accept no liability for any loss or damage arising directly or indirectly from the use of, or reliance on, this website's content. You should always seek professional advice tailored to your specific circumstances before acting on any information in this article. Liability limited by a scheme approved under Professional Standards Legislation.