In the latter part of 2020, the Australian Law Reform Commission (ALRC) was tasked by the Federal Government to review the legislative framework for corporations and financial services regulation, with a view to ensuring, “within … existing policy settings”, that framework is “adaptive, efficient and navigable”.
For the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, simplification (ie enhanced efficiency, navigability) of financial services regulation in Australia was seen as critical to ensuring its effectiveness: by eliminating as far as possible “exceptions and qualifications to generally applicable norms of conduct” with legislation identifying “expressly the fundamental norms of behaviour in respect of rules”.
Foundational to the simplification goal, was identifying how the existing law “fits together”, the Royal Commission recognised.
The project thus undertaken by the ALRC in 2020 involved mapping key areas of financial services law. The current issue of the Company and Securities Law Journal, Vol 38 No 5, is a Special Issue entitled “Financial Services Laws – Understanding the Devil in the Detail”. It contains a collection of articles, the product of a collaboration between the ALRC and leading Australian academics, that consider and critically analyse the findings of the ALRC’s legislative mapping exercise.
Topics covered, include:
- the proliferation of delegated legislation in financial services regulation and the implications of the same, including in terms of inconsistency, excessive fragmentation, and lack of effective oversight;
- the regulation of disclosure in relation to the issue or sale of securities and financial products under the prospectus and product disclosure statement (PDS) regimes – noting overlap, divergence, and interpretative challenges with regards to key standards and tests;
- the licensing regimes in respect of financial services, credit and superannuation; and
- the duties of loyalty owed by providers of financial advice, superannuation funds and mortgage broking services to their customers, identifying variations in the substance and modality of the various regimes.
More broadly, the articles also consider the intersection of the problem of overly complex financial services regimes with larger questions, for example, excessive legislative delegation and the compliance with separation of powers and rule of law principles.
Finally, the articles identify options for reform, including via considering alternative approaches to financial services regulation, the scope for consolidation, harmonisation and limitations, and approaches to legislative design aimed at “enhancing comprehensibility and navigability”.
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