The Australian Law Reform Commission has confirmed the government has implemented 13 of the recommendations tabled in its final report into the corporations and financial services legislation.
In the report, the ALRC concedes there are a number of steps required to simplify Australia’s financial services legislation that it dubbed as “porridge” when it unveiled the recommendations in January, which is widely accepted as being no longer fit for purpose after more than 20 years of development.
Legislative changes to some of the more technical aspects of the legislation began in earnest, with the recommendations implemented so far relating to the more technical aspects of the legislation, including the creation of a single glossary for the Corporations Act to ensure definitions easier to find. Some of the headings for defined terms have been made consistent to make those definitions easier to find.
The webinar, held on Wednesday, heard that Chapter 7 of the Corporations Act, which deals with financial services and markets, is bogged down with the extensive use of notional amendments, which create uncertainty and invisibility within the act because the provision may not be relied upon to reflect the actual law, presenting an incoherent legislative hierarchy.
In a webinar hosted by Wolters Kluwer, a panel of senior ALRC spokespeople explained that the final report, which includes 58 recommendations, follows an exhaustive investigative process over the past three years to understand a better way forward.
There will be a gradual restructuring of the provisions recommended, and 10-yearly reviews will follow to ensure that the reforms continue to meet the needs of the financial services system.
While technology will form one part of the solution, the ALRC has recommended tackling the overarching issues in the legislation and then supplementing the new legislation with technology to make it easier to access.
The biggest problem with the existing act is the sheer volume of notional amendments, ALRC’s senior legal officer Nicholas Simoes da Silva said.
“If there’s one thing you have to tackle it would be that there are more than 1200 distinct notional amendments changing the legal effect of the provisions in Chapter 7 or elsewhere within the Corporations Act without changing the text,” Simoes da Silva said.
“It’s almost nightmarish to look at the face of the Corporations Act and to not know whether it’s a legal effect as it says because there may be some notional amendment buried in a legislative instrument among the hundreds that omits a provision or adds in a new provision or offence.”
Attendees were told that the ALRC understands that a good legislative hierarchy is one that is predictable, that provides a general understanding of where to find obligations affecting certain persons and products or services.
The ALRC acknowledged that implementing a legislative overhaul of this size without too much disruption to the system is difficult, however it understands the effort required to fix the act will only be more challenging over the course of time.
The panel acknowledged that implementing these changes will be a huge job, but unwinding the complexity should help reduce unnecessary costs required to navigate the legislation.
Meanwhile, discussions with stakeholders throughout the enquiry reveals that while there is plenty of necessary complexity, there is a significant amount that the ALRC can do to reduce the unnecessary legislative complexity, explained the commission’s principal legal officer, Christopher Ash.
“I think in the final report that we do a fairly good job of demonstrating why we need change and making the same point that the [Hayne] royal commission made five years ago that this complexity simply continues to accrue and if don’t start now, the effort required is only going to get harder,” Ash said.
He likened the task of updating the act while continuing to rely on it as being like a treadmill.
“There’s simply no time for the government and its departments to get off that treadmill and tend to the pieces of infrastructure,” Ash said.
“One thing that become fundamentally clear during the inquiry was almost universal acceptance among stakeholders that there are serious problems in this legislation, and that it’s worthwhile to fix, with even some people who were sceptical about the need for reform earlier in the enquiry agreed.
“Hopefully those of you who have looked up the act recently have had positive experiences with those changes.”
ALRC legal officer Ellie Filkin also outlined the extensive costs involved in implementing changes, which will impact the regulator community, including, investors, the legal system, government and taxpayers.
“We’ve heard so many stories from financial services firms and their legal advisers about the enormous challenges they face in finding the law and the cost in the time in takes to prepare legal advice or having to develop compliance systems,” Filkin said.
“We’ve heard that they have highly tailored systems to cope with the complexity of the existing framework.”
This article was edited on 6 May 2024 to clarify the government has implemented the recommendations from the ALRC.
The only solution is to follow the lead Justinian ordered nearly 1500 years ago, when he recognised that the Legal framework WAS the problem, not the solution, so he ordered 90 percent of laws and regulations to be scrapped and rewritten in clear and concise wording so every person could understand their rights and requirements.
This was achieved in just over ONE YEAR and 4 basic tenements of his order still stand today in Western Law, which are;
1) All citizens had the right to equal treatment under the law.
2) A person was considered innocent until proven guilty.
3) The burden of proof rested with the accuser rather than the accused.
4) Any Law that seemed unreasonable or grossly unfair, could be set aside.
The current Legal framework, as recognised by the ALRC, is a miasma of impenetrable legalize and Australia needs to recognise that our economy and millions of peoples lives are being continually worn down, not protected by this disgraceful Legal framework that only benefits the Legal and compliance fraternity who charge Billions of dollars and we still end up with “Legal Interpretation,” and a merry go round of never ending legal debate while the rest of society are being screwed to the wall by indecipherable mumbo jumbo.