A report into legislation governing Australia’s financial services industry has found it is a tangled mess – difficult to navigate, costly to comply with, and unnecessarily difficult to enforce.
The Australian Law Reform Commission Final Report, Confronting Complexity: Reforming Corporations and Financial Services Legislation, which was tabled in Parliament today, contains 58 recommendations to simplify the law.
These reforms aim to reduce costs for service providers and consumers, improve productivity by reducing complexity, and provide clarity around compliance requirements and enforcement.
The recommendations in the Final Report include:
- the redesign of financial services legislation to give it a clear home and identity as the “Financial Services Law”, making it easier and less costly to find, navigate, and understand;
- the use of thematic, consolidated rulebooks to provide flexibility for regulating products, persons, services, or circumstances;
- a single, simplified definition of “financial product’ or “‘financial service”; and
- consolidated and less complex offence and penalty provisions, with clearer consequences for breaches.
Thirteen recommendations have already been implemented, in full or in part, by legislation passed during 2023.
The report follows on from the findings of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry in 2019 which exposed the deficiencies of the current legal infrastructure.
“Australia’s laws governing financial services are a confusing maze and need to be overhauled,” ALRC President Mordy Bromberg said.
“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,” Justice Bromberg said.
“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.”