Financial Services Laws under review for simplification

The Australian Law Reform Commission (ALRC) is undertaking a review of Australia’s financial services laws focused on simplifying and making them work better, particularly in light of the continuing emergence of new business models, technologies and practices.

The ALRC review follows the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne Royal Commission).

Chapter 7 of the Corporations Act 2001 (Cth) (which provides the core of the ‘Finanical Services Laws’ along with related regulations and definitions) is complex, labyrinthine and unwieldy, even in the hands of expert financial services lawyers.  

Mackay Lawyers & Advisors welcome the review – the Financial Services Laws have been ripe for review for some time.  But don’t get too excited – the ALRC’s timeframe for the review extends over the next three years to November 2023.

The Review

On 9 September 2020 Attorney General Christian Porter referred the review to the ALRC, charging it with considering what changes could be made to the Corporations Act 2001 (Cth), the Corporations Regulations 2001, and other financial services legislation in order to simplify and rationalise the law in respect of:

1. The use of definitions in the corporations and financial services legislation;
2. The coherence of the regulatory design and hierarchy of laws, covering primary law provisions, regulations, class orders, and standards; and
3. How Chapter 7 of the Corporations Act 2001 and the relevant regulations could be reframed or restructured.

Timeframe

The ALRC’s terms of reference involve a staged approach to the above questions, involving the production of reports as follows:

• 30 November 2021 – Interim Report on Question 1 (use of definitions);
• 30 September 2022 – Interim Report on Question 2 (coherence of regulatory design);
• 25 August 2023 – Interim Report on Question 3 (Structure of Chapter 7); and
• 23 November 2023 – Final Report.

Noting one of the AG’s principal regards is the emergence of new business models, technologies and practices, it will be interesting to see what new practices emerge between now and the Final Report in November 2023, and how stakeholders and the ALRC’s reports respond to them.

Consultation and Terms of Reference

The ALRC’s terms of reference require it to consult widely with, “regulatory bodies, the financial services sector, business and other representative bodies, consumer groups, other civil society organisations, and academics.”   While details of these consultation arrangements have not yet been published, we consider that the breadth of perspectives from these individuals and groups will provide the ALRC a robust basis to prepare its reports.

Further details, including the Terms of Reference, can be accessed at:

https://www.alrc.gov.au/inquiry/review-of-the-legislative-framework-for-corporations-and-financial-services-regulation/terms-of-reference/

Hayne’s influence

The connection with the Hayne Royal Commission is clear – the ALRC has been specifically directed to review the Final Report from the Hayne Royal Commission, and the Hon Mr Hayne AC QC is one 11 members of the ALRC’s advisory committee.

Our view

Mackay Lawyers & Advisors welcomes the ALRC’s review as an opportunity for important simplification and improvement. In our experience, the AG’s statement that the, “complexity of corporations and financial services laws makes it harder for consumers and regulated entities to understand how the law applies to them and increases their regulatory compliance burden” is entirely accurate.  As experts in these laws, they are largely impenetrable for ordinary people and many professional advisors other than experts, and simplification and better coordination would improve consumer and regulatory outcomes, and potentially also save business money.

We will continue to monitor developments with the ALRC’s enquiry.

Dan Mackay (Director) and Charles Haszler (Lawyer)

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