The final report of the Australian Law Reform Commission (ALRC) inquiry into financial services legislation has been tabled in Parliament today.
The report, Confronting Complexity: Reforming Corporations and Financial Services Legislation, was tabled today by Attorney-General, the Hon Mark Dreyfus.
With the terms of reference first received in September 2020, the ALRC has been examining the use of definitions in corporations and financial services legislation, the coherence of regulatory design and hierarchy of laws, and how the Corporations Act 2001 could be reframed or restructured.
The final report described how the legislation governing Australia’s financial services industry is a tangled mess – difficult to navigate, costly to comply with, and unnecessarily difficult to enforce.
It made 58 recommendations – 13 of which have already been implemented in full or in part – which aim to reduce costs for service providers and consumers, improve productivity and provide clarity around compliance requirements.
Recommendations in the final report include:
- Redesigning financial services legislation to give it a clear home and identity as the “Financial Services Law“, making it easier and less costly to find, navigate and understand.
- Ending the use of almost invisible notional amendments that make the law deeply inaccessible, and instead using thematic, consolidated rulebooks to provide flexibility for regulating particular products, persons, services, or circumstances.
- Making it easier to tell when something is a “financial product“ or “financial service“ by introducing a single, simplified definition of both terms.
- Making offence and penalty provisions less complex and more obvious by consolidating them into a smaller number of provisions that cover the same conduct, making them easier to identify, and making the consequences of breach clear on the face of the law.
Justice Mordecai Bromberg, president of the ALRC who took over from Justice Sarah Derrington in June 2023, said: “Australia’s laws governing financial services are a confusing maze. The reforms outlined in this report will make these laws easier to understand and navigate, drive down the costs associated with complying with the law, and make it easier for consumers to understand and enforce their rights.
“These laws provide the legal and economic infrastructure of the financial services industry. The reforms we’re proposing are broadly supported by stakeholders and if implemented will see substantial improvements for both consumers and business.”
