THE LEGAL profession and financial services industry have welcomed proposed reforms to the financial services regulatory regime, which they argue will simplify its operation and reduce burden for industry, while also diminishing the blame on lawyers for its complexity.
The proposed Refinements to Financial Services Regulation, announced last week by the Federal Government, addresses deficiencies in the current regime. The proposals are an indirect acknowledgment that there has been complexity in the legislation that has not been caused by lawyers taking a legalistic stance, which may have made things overly complex for consumers, Blake Dawson Waldron partner Michael Vrisakis told Lawyers Weekly.
“It is an acknowledgment that there was a complexity inherent in the legislation and therefore a recognition that the framework required simplifying — rather than blaming lawyers further for creating that complexity,” Vrisakis said.
The legal profession, financial services industry and consumers will be delighted with the proposed changes, said Vrisakis, because “the pain and anguish in trying to comply with the requirements” has been lessened. They were previously very “user-unfriendly”, he said.
The Government has listened the problems people had and have requested that there be some simplification of the process, said Vrisakis. They have allowed short form product disclosure to be used. The changes would give people access to documents under request, which is what people have been “clambering for”, he said.
Investment and Financial Services Association CEO Richard Gilbert said that overall, the proposed refinements are welcomed by the financial services industry. He argued that consumers have been “overwhelmed by the amount of paper-based information presented to them and will be relieved to be able to have relevant information far better tailored for their needs”.
The Australian Securities and Investments Commission (ASIC), which worked closely with the Government in developing the proposals paper, said it shares its objectives in ensuring reforms deliver real benefits to consumers, “while not overburdening business”.
The banking industry, as well, last week applauded the proposed changes. The Australian Bankers’ Association (ABA) said the refinements are sensible, with better outcomes for customers. The ABA supports the policy intent of the FSR in promoting consumer protection through wide-ranging licensing, disclosure and conduct, and regulatory frameworks for financial products, markets and financial services providers.
The changes, the ABA claimed, would mean that disclosure of information for consumers will be better aligned to consumer needs. ABA Chief Executive David Bell said the nature of the wide-ranging impact of Financial Services Reform (FSR) on consumers and the financial services industry could be expected to result in unintended issues that would need addressing.
“The proposed changes will reduce the amount of paperwork and lengthy, complicated telephone banking oral scripts but will retain important disclosures so that customers get the appropriate balance of information to assist them in making informed banking and investment decisions,” said Bell.
The Shadow Assistant Treasurer and Shadow Minister for Banking and Financial Services, Joel Fitzgibbon said last week that Labor took a policy of reviewing the FSR legislation to the last election. “This is because the Government botched the original law,” he said.
“It was heavy handed legislation which failed to adequately reflect the interests of consumers and financial service providers. The compliance burden was too high. Disclosure documents of nearly 100 pages are of little real use to consumers and were doing more harm than good,” Fitzgibbon said.
Fitzgibbon argued that Parliamentary Secretaries have long called for a “tweaking” of the law, but this recent restructuring of the legislative framework “serves to show how poorly the original legislation operated”. Labor supports the changes, he said, and will be consulting with stakeholders to ensure they adequately defend the consumer, as well as enhance competition.
See Blake Dawson Waldron partner Michael Vrisakis’ opinion on the tuning of the FSR legislation on page 15 of Lawyers Weekly this week.