In a new background paper released this week, Risk and Reform in Australian Financial Services Law, the commission said the evolution of financial risk has been an key factor in law reform in financial services.
“… the paper reveals how the ‘shifting sands’ of regulatory approaches have resulted in legislation that is unwieldy and extraordinarily complex,” the ALRC said in a statement.
“The paper highlights how the existing legislative model has proven inadequate, and how a new architecture could better accommodate change going forward.”
ALRC’s research suggests that there are two major changes that have occurred over time which have led to regulatory responses: the first is a “risk shift” in which individuals’ concern of risk has increased, such as superannuation replacing schemes like the age pension and a “financialisation” of the Australian economy.
To address the “inadequate” existing legislation, the ALRC has called for a “comprehensive and ongoing” review of the law to ensure it remains coherent and to “ensure that the legislative framework for regulation provides an architecture that is sufficiently flexible to accommodate inevitable future changes”.
It argued that the Corporations Act’s structure is “unsuitable” and that the legislation administered by the Australian Prudential Regulation Authority (APRA) had better adapted to the ongoing changes to financial risk.
“In the end, the history of Australian financial regulation highlights a risk of an entirely different stripe: the risk that the law will become, or already is, too complex, incoherent, or inaccessible to be understood or applied,” the ALRC said.
“Or, that it imposes a disproportionate burden on those who are required to try and understand it — including consumers of financial products and services (and their lawyers), financial firms, courts, and regulators.
“However, those risks are also an opportunity: to improve the law for the benefit of all. That is the task the ALRC is currently embarked upon.”
I think Walt Disney might awaken from his cryogenically frozen state before anyone in power with any sense makes changes that would benefit advisers and their clients…What would become of the non existent ASIC red tape reduction unit? They might have to join the unemployed queue!
After 4 Corners report on State Trustees – Why is there legislation at all for the finance sector. All the state trustees can charge what they like, neglect to serve and not review their administration duties for Australians. Best Interest duty, Ethics etc…… does not apply to state trustees administrating finances on behalf of Australians. The unfair playing field we are operating under has been wrong for a very long time.
The ALRC paper exemplifies how increasing complexity has dogged the path of financial regulatory change. A review of the evolution of the Age Pension since first paid out in 1909 reveals a similar pattern of regulatory complexity. Likewise, the fraught situation in Aged Care. Health is similarly stifled in achieving its priorities, while Employment is short of employees.
The common thread throughout is the failure of governments (and institutions) to properly prepare themselves and consumers for the twin outcomes of increasing longevity – reward and risk.
Consumers on average already significantly outlive their health and life expectancy at birth – their longevity bonus. Governments need to reduce the complexities and costs for people in these later stages to reduce financial and other concerns. People also need to understand that order to support those who need it, governments must share the longevity bonus, which could be achieved by better longevity education and clear incentives for productive behaviour.
A National Longevity Strategy would ensure a focus on a win-win outcome. This would require better longevity education, and harmonising the activities of the major silos above, yielding significant financial benefits.
What an earth-shattering revelation….simply proves those voting through legislation have no idea of the consequences of their actions!!
Frydenberg ?
Ms Hume ?
LNP 75% in power over last 22 years ?
ASIC especially Ms Press ?
[b]HAVE TOTALLY AND UTTERLY FAILED [/b]
GET RID OF THEM ALL AND START AGAIN.