Father: Corporations Act 2001, could you come here please? Your mother and I would like to speak with you.
[Enter Corporations Act.]
Father: Son, this year you’re turning 20 years old. Your mother and I are proud of you – you’ve achieved a lot: a nationally consistent regulation of basic company law, insolvency, financial markets, products and services, among so much else. However, we are concerned about you. You need to grow up.
Corporations Act: What did I do? Was it the Financial Sector Reform (Hayne Royal Commission Response) Act 2020?
Father: No son, it’s nothing to do with that. Please take a seat. And remember, what we’re about to say comes from a place of love.
Two officers from the Australian Law Reform Commission, which is charged with identifying unnecessary complexity in financial services regulation, have released a short skit that skewers the Corporations Act leading up to the twentieth anniversary of its inception.
The three-page ‘You’re almost 20, Corporations Act’ skit is described as a “light-hearted dialogue” between the concerned parents of the Act, who chastise the adolescent document for getting fat, hiding legislative documents under the bed and using obscure definitions like “simple corporate bonds depository nominee”.
“Your father and I remember when you were just 1866 pages long,” says ‘Mother’. “You’ve really been bulking up. You’re now over 3,700 pages long, and that doesn’t even include your regulations and other legislative instruments.”
Despite its whimsy (and the disclaimer that “no feelings of the Corporations Act were harmed”), the release provides a glimpse into the findings of the ALRC as it conducts its three-year review into what minister Hume called the Gordian knot of financial services regulation.
The review, which will address the framework of financial services regulation while steering clear of policy, has particular relevance for advisers; the first interim report released by the commission in December focused almost solely on the “overly prescriptive approach” used in advice regulation.
ALRC special counsel Andrew Godwin told Professional Planner earlier this month that while the review covers the entire financial services regulatory sphere, advice regulation has a “certain prominence” that “continues to excite discussion and debate”.
True words in jest
The ALRC advises that the legal officers behind the light-hearted parody, William Isdale and Nicholas Simoes da Silva, do not represent the views of the commission.
Yet there is clearly some truth to it. The ALRC noted in its interim report that the Act is “complex and unwieldy”, while Godwin himself said chapter seven – which covers financial services and financial products – is generally recognised as “not an easy piece of legislation” with “lines of demarcation sometimes difficult to identify”.
Godwin also noted that after 20 years, chapter seven is now “an accumulation of amendments, revisions, modifications and what-have-you”.
In the words of 17th century writer Joseph Ebsworth, “many a true word hath been spoke in jest”.
We’ve got some ideas
The ALRC’s decision to permit the skit’s release is telling. If the ongoing review found only negligible issues with the Act’s current framework it’s hard to imagine the commission would publicly ridicule it.
The regulator even gets a mention in the scene, with the writers showing sympathy for ASIC’s role in enforcing the Act.
“Don’t you think you should be able to stand on your own two feet and let the nice people at ASIC get on with their other important work?” says Mother.
The Act is also chastised for not keeping up with technology and still requiring directors to execute documents on a single, hard copy. “You’re falling behind the other kids,” Mother complains.
Mother then suggests a “more fundamental review” of the technology embedded in the Corporations Act is required – again, a point unlikely to be written off as pure comedy.
“Perhaps you should talk to the ALRC,” Mother concludes. “I hear they’ve got some ideas…”