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The Australian Law Reform Commission has sought opinions from brokers on how to simplify a tangled web of laws governing the financial services sector.
Government agency Australian Law Reform Commission (ALRC) has kicked off a review into the complexity of corporations and financial services legislation, after it argued in a recent report that the Corporations Act and the Corporations Regulations were unnecessarily complex.
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“Many stakeholders have identified the navigability of the law as a key concern – it is too difficult to locate relevant parts of the law and even experienced lawyers cannot always be confident that they are taking into account all relevant provisions and instruments on a particular issue without missing something,” a summary report from the ALRC said.
As noted in ALRC’s interim report, there are 3,539 sections, 30 chapters, 242 parts, 382 divisions, 262 subdivisions and three schedules in the Corporations Act. In the Corporations Regulations, there are 1,418 regulations across 25 chapters, 198 parts, 193 divisions, 74 subdivisions and 29 schedules.
The pieces of legislation sit under a regulatory ecosystem comprising more than 270 legislative instruments made under the Corporations Act by ASIC, more than 191 other Corporations Act legislative instruments, over 200 regulatory guides, more than 20,000 ASIC instruments and over 677 ASIC reports.
Other problems with the legislation listed include complex use and difficulties navigating definitions, overly prescriptive laws, obscure policy goals and norms of conduct, as well as challenges in administering the complex legislation.
The ALRC is looking to make recommendations for law reform, with a focus on how the current law can be simplified and rationalised.
As part of the review, it has opened an industry consultation, inviting submissions from providers such as brokers and financial advisers, on its law reform proposals and questions for stakeholders.
“Input from those at the coalface – such as finance and mortgage brokers, and their clients – is critical to understanding why the current law is so complex and how it could be improved,” the ALRC told The Adviser in a statement.
A spokesperson added that the consultation will consider discussions with peak bodies, including the Finance Brokers Association of Australia (FBAA) and the Mortgage and Finance Brokers Association of Australia (MFAA).
The consultation document, Interim Report A, has discussed the regulation of credit activities, including mortgage broking, among other financial services.
The ALRC has suggested exploring the consolidation of the separate regulatory regimes for credit and financial products, and financial services.
Currently, consumer credit – in relation to licensing, disclosure and conduct – is regulated under the National Consumer Credit Protection Act 2009 (NCCP Act), while the financial services ecosystem is policed by the Corporations Act and the Australian Securities and Investments Commission Act 2001 (ASIC Act).
Some of the proposed reforms from the ALRC are to include wording around credit in the Corporations and ASIC Acts, and to have a definition of credit that is consistent with the NCCP Act.
“The view of finance and mortgage brokers will be important to further develop this idea,” the ALRC told The Adviser.
Further, the report has questioned whether it could be worth consolidating the licensing regimes for financial services and for credit.
Submissions responding to Interim Report A are due on 25 February.
The ALRC’s inquiry is part of the government’s response to the banking royal commission.
Prior to the release of the interim report, the body had completed 140 informal consultations across Australia.
[Related: Industry in ‘incredibly strong position’ ahead of rem review]
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