Preliminary review of over-regulation in Australian financial services

Abstract

This article examines a preliminary review and the limited evidence of over-regulation in Australian financial services. The 1997 Wallis Report and the CLERP 6 paper, resulted in the amendments to Ch 7 of the Corporations Act 2001 (Cth) by the Financial Services Reform Act. Nearly a decade later the system based upon 'one-size fits all', dual track regime and a consistent licensing regime has greatly increased the costs of compliance. In the area of enforcement there has not been a dramatic change to the effective techniques applied by ASIC over other agencies, such as APRA. In particular there are clear economic arguments, as well as international experiences which state that a single financial services regulator is more effective than the multi-layered approach adopted in Australia. Finally, in the superannuation area of financial services, which is worth A$800 billion, there is unnecessary dual licensing and duplicated regulation, with little evidence of any consumer-member benefit, but at a much greater cost.