Simplifying financial services legislation should result in long term gains for the economy through better compliance, less financial litigation, better dispute resolution structures and a more productive financial services sector.
Speaking at the Stockbrokers and Investment Advisers Association (SIAA) conference in Sydney, president of the Australian Law Reform Commission (ALRC), Justice Sarah Derrington illustrated her vision for the financial services industry following the commission’s review into its legislation.
“In the long term, what should happen if reform of the nature that we are suggesting takes place, there should be better compliance. That should happen at the outset because it should be more straightforward and easier to see and to understand with what one is supposed to comply,” Justice Derrington said.
“It should reduce financial litigation, and that is an enormous impost on business and government.
“It might result in better risk dispute resolution structures, some of which could be managed technologically through Artificial Intelligence and some of which could be more cost-effective [at the] tribunal level.
“And all of this in turn should result in a more productive financial services sector, which is confident to take the risks in such an ever-changing market. That can only be a good thing for the economy and therefore the country overall.”
Citing a Department of Finance report, Justice Derrington said it was absurd that Australia spent more on its financial sector than in the UK and that this suggested some pain in the form of regulatory change was overdue.
Justice Derrington said the commission was aware that any reforms were going to be unpalatable to some which was why it had begun to chart a range of options for Government from “least painful to unbearable”.
“Least painful, looks like simply using technological solutions to the Federal Register for legislation to make things clearer and more easily navigable,” she said.
“I think if we did that people would be disappointed, but that is an option.
“Unbearable, is scrapping the whole thing and redrafting from scratch and there’s not a lot of appetite for that either. So we will land somewhere in the middle.”
She said the ALRC had tried to entice economists to cost the options but that had proven “extremely challenging”.
“But we are going to try and get some proper economic modelling of at least some of the proposals, for example, those in relation to disclosure.”
