ALRC outlines plans for proposed financial laws overhaul

3 October 2022

The Australian Law Reform Commission (ALRC) has put forward proposals to reorganise and clean-up financial services laws, with the current system likened to a poorly built house.

Proposals and recommendations in a second interim report released as part of a three-year review aim to create a consistent design and hierarchy that is easier to navigate, while removing wordings and parts of the framework that are no longer necessary.

An introduction says “in many respects” the report is the most critical of the inquiry and there is an urgent need to create a legislative structure that’s fit for purpose.

“The longer that the existing ad hoc legislative design choices remain entrenched, the more difficult, time consuming and expensive it will become to untangle the complexity that inevitably accretes,” it says.

The report proposes a de-cluttering of the Corporations Act as well as the introduction of a Scoping Order containing exclusions, class exemptions, and other detail needed to help set the scope, and proposes thematic rulebooks giving effect to the Act in different regulatory contexts.

ALRC Senior Legal Officers William Isdale and Christopher Ash say in an article on the report that the law as it stands today is the work of many architects, each following different plans and reflecting amendments spurred by crises, and schemes underpinned by differing approaches to regulation.

“If Australia’s corporations and financial services statutes were likened to a house, it would be a large and disordered one,” they say.

“A house in which new annexes have been added with little thought to overall design, and in which objects are scattered and hidden, with little regard to how they may be found in the future.”

The report includes recommendations on technical improvements that could be implemented while the inquiry continues, if accepted by the Government, as well as proposals and questions for further consultation.

Submissions on the report are due by November 30. More details are available here.