MLC has called for a comprehensive review of the Financial Services Reform Act (FSR), stating in its submission to the Ripoll Inquiry that an independent body should undertake the assessment.
Notably, MLC claimed there is strong evidence that FSR requirements have added to the cost of advice and “works against its original goals of proper conduct and meaningful disclosure for investors”.
Earlier in the submission MLC said “the financial services industry has largely persisted with sales-based distribution models inside a regulatory framework that was working in the opposite direction”.
MLC went on to say that the FSR “has been interpreted and enforced as a product regulating regime”, adding that “its efficacy on this front is also doubtful with recent experiences highlighting the failure of disclosure regarding risks, such as those associated with mortgage trusts”.
MLC acknowledged the “widespread criticism” of the crippled legislation since its commencement in 2001, with particular reference to “its reliance on the current disclosure provisions and its failure to meet its objective of providing meaningful information to retail investors”.
MLC recommended that the body, which would include representatives from government and industry as well as consumers, review the Act “against its original objectives and current assessments of its operations”.
