{"id":69527,"date":"2024-01-22T12:59:47","date_gmt":"2024-01-22T02:59:47","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=69527"},"modified":"2024-01-26T11:53:52","modified_gmt":"2024-01-26T01:53:52","slug":"financial-services-industry-legislation-a-tangled-mess","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2024\/01\/22\/financial-services-industry-legislation-a-tangled-mess\/","title":{"rendered":"Financial Services Industry Legislation a \u2018Tangled Mess\u2019"},"content":{"rendered":"<p>The legislation governing Australia\u2019s financial services industry is a tangled mess, according to an <a href=\"https:\/\/www.alrc.gov.au\/\" target=\"_blank\" rel=\"noopener\">Australian Law Reform Commission<\/a> final report, which includes a recommendation for a revamped legislative framework for the financial services sector.<\/p>\n<p>A statement from the ALRC says the legislation governing the financial services industry is \u201c&#8230;a tangled mess &#8211; difficult to navigate, costly to comply with, and unnecessarily difficult to enforce.\u201d<\/p>\n<p>It says that judges have described the current laws as being like \u2018porridge\u2019, \u2018tortuous\u2019, \u2018treacherous\u2019, and \u2018labyrinthine\u2019 and others have described the legislation as \u2018broken\u2019.<\/p>\n<p>The commission says complexity in the existing legislation is not an isolated problem \u2014 it costs businesses, consumers, investors, and the economy at large.<\/p>\n<p>In it\u2019s report<a href=\"https:\/\/www.alrc.gov.au\/wp-content\/uploads\/2024\/01\/ALRC-FSL-Final-Report-141.pdf\" target=\"_blank\" rel=\"noopener\"> <em>Confronting Complexity: Reforming Corporations and Financial Services Legislation<\/em>,<\/a> which was tabled in Parliament last week, the ALRC has made 58 recommendations to simplify the law, including a revamped legislative framework for the financial services sector.<\/p>\n<p>It says these reforms aim to reduce costs for service providers and consumers, improve productivity by reducing complexity, and provide clarity around compliance requirements and enforcement.<\/p>\n<p>Thirteen recommendations made during the Inquiry have already been implemented, in full or in part, by legislation passed during 2023.<\/p>\n<p>Recommendations in the Final Report include:<\/p>\n<ul>\n<li>Redesigning financial services legislation to give it a clear home and identity as the \u2018Financial Services Law,\u2019 making it easier and less costly to find, navigate, and understand<\/li>\n<li>Ending the use of almost invisible notional amendments that make the law deeply inaccessible, and instead using thematic, consolidated rulebooks to provide flexibility for regulating particular products, persons, services, or circumstances<\/li>\n<li>Making it easier to tell when something is a \u2018financial product\u2019 or \u2018financial service\u2019 by introducing a single, simplified definition of both terms<\/li>\n<li>Making offence and penalty provisions less complex and more obvious by consolidating them into a smaller number of provisions that cover the same conduct, making them easier to identify, and making the consequences of breach clear on the face of the law<\/li>\n<\/ul>\n<p>The commission says the report follows on from the findings of the Banking Royal Commission in 2019 that exposed the deficiencies of the current legal infrastructure.<\/p>\n<p>\u201cComplexity costs consumers not only in the expenses that are passed on by financial services providers, but by failing to protect them from misconduct.\u201d<\/p>\n<p>It notes the Royal Commission clearly demonstrated the economic and human costs of non-compliance with the law. \u201cThe ALRC\u2019s reforms would strengthen consumer protection substantially and reduce costs for business by making the law simpler to comply with and easier to enforce.&#8221;<\/p>\n<p>Justice <strong>Mordy Bromberg,<\/strong> President of the ALRC, says Australia\u2019s laws governing financial services \u201c\u2026are a confusing maze and need to be overhauled.\u201d<\/p>\n<p>He says the reforms outlined in the report \u201c\u2026will 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.\u201d<\/p>\n<p>He adds these laws &#8220;&#8230;provide the legal and economic infrastructure of the financial services industry. The reforms we\u2019re proposing are broadly supported by stakeholders and if implemented will see substantial improvements for both consumers and business.\u201d<\/p>\n<p><strong>Footnote &#8211; Longer than <em>War and Peace<\/em><\/strong><\/p>\n<p>In its <a href=\"https:\/\/www.alrc.gov.au\/wp-content\/uploads\/2024\/01\/ALRC-FSL-Final-Report-Summary-Report-141.pdf\" target=\"_blank\" rel=\"noopener\">68-page summary report<\/a> the ALRC notes that since 2001, the Corporations Act has almost doubled in length to more than 4,000 pages and over 800,000 words.<\/p>\n<p>And a footnote puts that into context.<\/p>\n<p>&#8220;By way of comparison, this is longer than the novels <em>War and Peace<\/em> by Leo Tolstoy (approximately 580,000 words) and T<em>he Lord of the Rings<\/em> by JRR Tolkien (approximately 550,000 words). While very few users, if any, would ever read the Corporations Act from start to finish, these comparisons help to give an impression of the scale of the Corporations Act.&#8221;<\/p>\n<p>It also notes that at 265,000 words, Chapter 7 of the Corporations Act is similar in length to the novel <em>Ulysses<\/em> by James Joyce.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The legislation governing Australia\u2019s financial services industry is a tangled mess, according to an Australian Law Reform Commission final report, which includes a recommendation for a revamped legislative framework for the financial services sector. A statement from the ALRC says the legislation governing the financial services industry is \u201c&#8230;a tangled mess &#8211; difficult to navigate, [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":69538,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,3,8282],"tags":[],"class_list":["post-69527","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-general","category-government"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/69527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=69527"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/69527\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/69538"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=69527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=69527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=69527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}