Third interim report proposes simpler structure and framing for financial services legislation

Today the Australian Law Reform Commission’s (ALRC’s) third Interim Report in its three year review to reduce complexity in corporations and financial services legislation was tabled in Parliament by the Attorney-General of Australia, the Hon Mark Dreyfus KC MP.

Interim Report C includes proposals for restructuring and reframing financial services legislation to make it easier to navigate and understand.

Interim Report C demonstrates that the existing structure and framing of financial services legislation — which have developed in an ad hoc manner since the legislation was introduced in 2001 — are sources of unnecessary complexity in the legislative framework. This complexity has produced unnecessary costs for regulated persons, consumers, and other stakeholders.

The ALRC anticipates that the reform ideas in Interim Report C would offer considerable benefits to all users of the legislation, including consumers, industry, and regulated entities, by producing legislation that is easier to navigate and understand. This would, in turn, reduce the costs of compliance and the costs of enforcement faced by regulators and consumers.

Interim Report C contains 4 recommendations, 14 proposals, and 1 question.

The ALRC is seeking submissions from the public in response to the proposals and questions by 26 July 2022. Submissions and further consultations will help the ALRC to formulate its ultimate recommendations at the conclusion of the inquiry. Interim Report C is the final interim report due in this Inquiry and it provides the last opportunity for submissions before the Final Report.

The ALRC proposes that financial services legislation in the Corporations Act 2001 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth) (known as the ASIC Act) should be restructured and reframed in accordance with accepted principles of legislative design. In particular, the ALRC proposes that there should be a Financial Services Law in a schedule to the Corporations Act 2001 (Cth), in similar manner to the Australian Consumer Law in Sch 2 to the Competition and Consumer Act 2010 (Cth).

Interim Report C also discusses how the ALRC’s broader proposals, including the proposed legislative model discussed in Interim Report B, may be implemented. The ALRC welcomes stakeholder feedback on its proposal for the creation of reform taskforces and the implementation roadmap detailed in Interim Report C.

The Inquiry is part of the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released in February 2019. The final report of the Inquiry is due by 30 November 2023.