FSC calls on Govt to provide clear and interactive Corporations Act
The Financial Services Council (FSC) is calling on the Government to provide a free online version of existing financial services laws with hyperlinks to all subsidiary legislations before the longer-term task of reforming the Corporations Act 2001.
In its submission to the Australian Law Reform Commission’s (ALRC) Interim Report A Financial Services Legislation, the council said it supported recommendations to simplify the Corporations Act (the Act) in principle as it had become unmanageable and inscrutable in recent years, leading to costs and delays.
But, according to the FSC, support for each individual recommendation would depend on final proposals which should be subject to further consultation with the sector.
It said presentation of the law online was key to ensure everyday professionals could access and understand their obligations.
“Close attention should be paid to its online presentation (eg hyperlinks, platforms that are easy to navigate and access, and centralised repositories of information),” the FSC noted.
The council said financial advice-related recommendations should interact cohesively with outcomes of the Government’s review of the quality of advice that would report in December and that changes made by legislative instruments should be incorporated into the Act periodically.
“The Inquiry should consider an approach that regulations are still used to make changes in a timely manner and then on a regular basis (eg annually, matters specified in regulations become absorbed into the Act).
“This would ensure regulations do not become unwieldy while ensuring appropriate parliamentary oversight.”
The FSC said a recent example of how this could be done was the Corporate Collective Investment Vehicles and Other Measures Bill which would amend the Act to incorporate some items specified in the regulations to improve readability of the law.
“Areas where this approach could be picked up for financial advice laws include, the requirement to issue an Statement of Advice (SOA) within five business days when providing time-critical advice and requirements around an authorised representative authorising a representative.”
It said the inquiry should examine the cost impact of the legislative framework and should consider how it was being applied in real terms across the financial services sector while having regard for the impact of duplication.
“For example, the introduction of the Design and Distribution Obligations (DDO) conflicts with a pre-existing disclosure framework or makes aspects of that framework redundant, and the costs of these changes should be considered.”
The council said it supported the ALRC’s proposed definitional principles to reduce complexity.
“The primary regulatory principle guiding the definition of the law should be certainty to protect consumers and promote market confidence.
“‘Black letter law’ should be the preferred approach to defining the law in areas that carry higher penalties for misconduct and a more principles-based approach could be used for areas carrying lower penalties.”
AUTHOR
Liam Cormican
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