3. Context

The ToR explicitly refer to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (‘Financial Services Royal Commission’) concluded in 2019. Recommendations 7.3 and 7.4 of the Financial Services Royal Commission related to simplification of the law. For example, recommendation 7.4 stated that:

As far as possible, legislation governing financial services entities should identify expressly what fundamental norms of behaviour are being pursued when particular and detailed rules are made about a particular subject matter.

These recommendations were described as examples of steps that need to be taken in the context of the ‘overall task’ of simplification of the law. Commissioner Hayne noted that such a task

will require examination of how the existing laws fit together and identification of the various policies given effect by the law’s various provisions. Only once this detailed work is done can decisions be made about how those policies can be given better and simpler legislative effect.[1]

In response, the Government tasked the Department of Treasury ‘to begin the longer term task of considering how to simplify the law, consistent with recommendations 7.3 and 7.4 of the Royal Commission.’[2]  The ALRC’s work will complement this ongoing work by Treasury.

There have been a number of other earlier reviews relevant to the financial services sector. The ALRC’s ToR refer explicitly to four of them. In addition, there have been approximately 30 other reviews conducted since 2009 relevant to the financial system, its regulators, banking, superannuation, financial service licensees, credit licensees, and insurance. The 1997 Financial System Inquiry chaired by Mr Stan Wallis AC remains a landmark report underpinning much of the current regulatory architecture. The ALRC considers it will be important as part of the inquiry to reflect on the key aims of these earlier initiatives, and to understand how and why financial services came to be regulated in the manner they are.

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[1]   Commonwealth of Australia, Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report: Volume 1 (2019) 495.

[2]   Australian Government, Restoring Trust in Australia’s Financial System: Financial Services Royal Commission Implementation Roadmap (2019) 5.