Financial services and corporations legislation in Australia is messy and complex with successive changes continually complicating the efforts of businesses and individuals to comply with the rules, according to the final report from the Australian Law Reform Commission (ALRC).
The report – “Confronting Complexity: Reforming Corporations and Financial Services Legislation”, was tabled in parliament today and the ALRC noted legislation governing the financial services industry was “difficult to navigate, costly to comply with, and unnecessarily difficult to enforce”.
“After more than 20 years of development, the legislative framework for corporations and financial services regulation is no longer fit for purpose. The existing legislative framework is unnecessarily complex, and complexity only continues to accrue,” the report stated.
“The tools used to build and maintain the legislative framework, such as notional amendments, conditional exemptions, and proliferating legislative instruments, often create more problems than they aim to solve. In short, the legislation is ripe for reform.”
As such, the report put forward 58 recommendations to simplify the law including redesigning financial services legislation to clearly identify it as the ‘Financial Services Law,’ introducing a single, simplified definition of ‘financial product’ and ‘financial service’, and consolidating offence and penalty provisions for the same conduct and making them easier to identify under the law. A further recommendation also called for all provisions related to a specific issue be grouped together with the most significant of them listed first.
ALRC president Justice Mordy Bromberg said the adoption of the recommendations, some of which already been implemented in full or part by legislation passed during 2023, would have widespread benefits.
“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,” Bromberg noted.
“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.”
The ALRC report follows on from the findings of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry in 2019 that exposed the deficiencies of the current legal infrastructure.
