The key problems that are sought to be addressed by this inquiry include the following:
- Regulation is overly complex and unwieldy, making it difficult for regulators, regulated entities, government agencies, courts, and legal practitioners to keep track of the body of regulatory materials.
- There are a large number of definitions scattered throughout legislation, and many key terms are defined differently within and between related statutes. In addition, many similar concepts and norms are described in different terms in different statutes.
- Definitions are frequently used as a means of ‘switching on and off’ sets of substantive obligations, rather than being used to elucidate meaning. As a result, multiple layers of detailed exceptions and qualifications to definitions are scattered across legislative sources, such that it becomes a drawn-out process to identify when particular obligations apply.
- There is no identifiable principled basis on which applicable rules are contained in and allocated between: primary legislation, delegated legislation, and soft law (such as regulatory guidance).
- Delegated legislation, including legislative instruments issued by regulators, are frequently used to substantively amend primary legislation, with implications for transparency, navigability, and broader rule of law objectives.
- The structure and framing of Chapter 7 of the Corporations Act do not provide clear links between the individual provisions and the fundamental norms of behaviour that they seek to pursue, as recommended by the Financial Services Royal Commission.
- An overly prescriptive approach to regulation creates risks of regulatory arbitrage (eg the design or provision of products and services to circumvent the requirements), adds to compliance costs, and reduces productivity.
The inquiry aims to achieve the following high-level outcomes:
- A legal framework that supports a productive and agile financial services sector while protecting consumers;
- Navigable regulation (greater ease in finding, understanding and complying with the relevant rules);
- Simplification (primarily reducing unnecessary complexity, including overlapping, inconsistent, and overly prescriptive rules);
- Clarity of obligations, and the fundamental norms of behaviour to which obligations are directed;
- Identification and clarification of the underlying policy objectives of Chapter 7 of the Corporations Act, and an assessment of the extent to which key provisions give effect to those objectives consistently and coherently;
- Regulation that is technology-neutral and supportive of innovation;
- Transparent and appropriate use of the legislative and regulatory hierarchy;
- A manageable regulatory framework for regulators and government agencies to administer, and for industry to implement and comply with, efficiently and effectively.