The Australian Law Reform Commission notes in its final report on simplifying financial services legislation that “at 265,000 words, Chapter 7 of the Corporations Act is similar in length to the novel Ulysses by James Joyce”.
And while the plot of the legislation isn’t nearly as good as the Irish literary classic, it’s a point well made.
Wrangling the legislation into the ALRC’s preferred semblance of logic and structure will require implementing no fewer than 58 recommendations, which were made public on Thursday after an exhaustive investigative process spanning more than three years.
“After more than 20 years of development, the legislative framework for corporations and financial services regulation is no longer fit for purpose,” the ARLC report said.
“The existing legislative framework is unnecessarily complex, and complexity only continues to accrue. Parts of the legislative framework have variously been described as ‘porridge’, ‘obscure and convoluted’, ‘shrouded in obfuscation’, and likened to a ‘maze’.”
The report confirmed what every financial adviser already knew: the laws they operate under are a mess. They are inconsistent, complex, and they have made getting even quite simple things done take too long. They have stymied real innovation in delivering financial advice, added to costs (thereby helping to block millions of people from professional advice), and too often require engaging a phalanx of lawyers to ensure no legal missteps.
Simplifying the law might not be all good news for the legal firms that make a living from the complexity of the law, but it will be welcomed by advisers and licensees as potentially making their lives just a little less miserable.
A separate review of financial advice laws, the Quality of Advice Review has been heralded as likely to reduce costs and support delivery of advice more efficiently to more consumers. But simplifying existing laws should not be underestimated for its potential impact on costs (and without quite so much politics and hullabaloo).
“Reducing costs of compliance and enforcement” is noted by the ALRC as one of the key outcomes of law reform. The ALRC proposes pulling apart and then reassembling existing legislation so that currently far-flung elements are grouped together in a way the report said would “make it easier to navigate and understand”, and it would do so under four broad themes: consumer protection, disclosure, financial advice, and general regulatory obligations.
Getting into the detail of what would wind up where, it gets pretty complex pretty quickly.