The Australian Financial Services Regulatory Commission has announced the release of its first set of recommendations on how to reform the financial services sector, including the reinstatement of a ‘one-stop-shop’ regulatory framework for the Australian economy and a new regulatory regime for businesses.
Key points:The Financial Services Modernisation Act 2012 introduced reforms to the financial sector, with changes to financial services and insurance companies and the creation of a new regulator for financial companiesThe Financial Industry Regulatory Authority is now a statutory bodyThe Federal Government is considering changes to the Financial Services Act 2012The recommendations are being considered by the Financial Markets Commission, which regulates the Australian financial markets, and the Federal Government, which is looking to create a new industry regulator.
In a statement on Monday, the FRSC said the reforms were intended to “modernise the financial markets to help protect Australians from financial risks”.
“The reforms will also improve the financial health of the Australian community by reducing the burden on banks and financial institutions, and improving the efficiency of financial services,” it said.
“The measures in the Financial Stability and Consumer Protection Act 2012 will provide greater certainty to Australian businesses and consumers about their financial stability.”
Mr Abbott has previously said the FSCC was not meant to be a regulator, but that it should “go and regulate businesses” if they wanted to.
But Mr Abbott said the proposals were not enough to stop “a very expensive financial crisis”.
“You cannot solve a financial crisis through regulation,” he said.
Mr Abbott’s proposed changes include introducing a new body to manage financial services, called the Financial Market Regulatory Authority.
“This body will be responsible for providing the regulatory oversight of the financial industry, as well as providing a common framework for financial market supervision across Australia,” the FRCS statement said.
It said the new body would have powers to regulate a range of industries, including banking, insurance and credit, and be able to issue guidelines on compliance with the FSLA.
“It will also be responsible, through the FMA, for setting the rules for financial services across the economy,” the statement said, adding the new authority would also be empowered to issue public notices requiring businesses to comply with the new laws.’
No need for another regulator’The changes have not yet been formally approved by the Federal Parliament, but Mr Abbott has said he would consider changing the FSA’s regulatory structure.
“I think there is a need for a new structure that will be able, in some circumstances, to provide some certainty to the Australian public, to help businesses, to prevent some of the risks from the financial system from becoming too great,” he told Sky News on Monday.
“And that would include the need to have some type of regulator.”
The changes were also opposed by industry and consumer groups, who said the proposed changes would put the financial market at risk.
“We are extremely concerned by the proposed financial reform proposals that are in the final stages of consideration by the FSRCC,” said Paul Lonergan from the Australian Institute of Directors.
“For too long the FSEA has had the authority to regulate the financial service sector, but it has failed to do so.”