Australia’s financial services regulatory framework
Australian Regulatory Compliance Review:
UK-based compliance resource Complinet is expanding its Asia-Pacific focus and asked me to write an analysis that would assist their foreign customers as well as Australian-based companies. What started out as a 1500 word article ended up as more than 2600 words.
The key theme is that regulation of the financial services industry is fragmented: between the commonmwealth and states and between organisation type and activity type. The new government has set itself a huge task of improving productivity and efficiency by reforming regulation.
Set out below is Part 1 of an edited version of the article which gives an overview of the current laws. Part 2 is here.
Australia’s financial services regulatory framework — an overview
Recent concerns over margin lending, short selling and stock lending in Australia have intensified the debate about the division of regulation between the country’s federal and state jurisdictions. The discussion has highlighted the fact that Australia is a federation of six states and two territories, all of which play a part in financial services regulation. This has inevitably led to a patchwork of different regulatory frameworks in some areas, not to mention the potential for gaps to appear. In recent months, the concerns over these regulatory gaps and overlaps have forced the various levels of government to agree to reform this fragmented regulatory model.
Senator Nick Sherry, federal minister for corporate law and superannuation, told a recent industry event that "The Productivity Commission has been clear in its recommendation that the commonwealth take over regulation of credit. Further, the Council of Australian Governments recently agreed in-principle to the commonwealth assuming responsibility for regulating mortgage credit and advice as well as margin loans, with a view to reassessing the regulation of other credit arrangements in due course" .
He added that the sub-prime meltdown and…