Navigation: Previous Page | Contents | Next Page
Chapter 3 - General support for Draft Bill in submissions
3.1
The vast majority of the 67 submissions received
by the Committee expressed general support for the principles and objectives of
the draft Bill. Numbers of submissions referred favourably to the draft Bill
implementing aspects of the Financial System Inquiry recommendations. In this
context several submissions referred to the draft Bill as a milestone or a
watershed for Australian financial services. In particular, submissions
supported the policy objectives of the draft Bill, especially its uniform
requirements within a single comprehensive framework. In this context several
submissions pointed to the advantages of a level playing field. A number of
submissions suggested that the draft Bill would facilitate the use of
information technology in financial services. A considerable number of
submissions expressed satisfaction that the draft Bill had taken into account
suggestions and concerns expressed earlier in the consultative process. The
following paragraphs set out comments made in submissions about the general
scheme of the draft Bill. The comments are intended to illustrate the range of
support for the draft Bill across the whole of the financial services sector.
3.2
The Australian Securities and Investments
Commission (ASIC) submitted that, apart from the issue of the transitional
arrangements to the new licensing regime, it strongly supported the proposed
single statutory regime for intermediary licensing, which would protect
consumers and facilitate efficient business conduct by imposing consistent
regulatory standards across functionally equivalent financial services.
3.3
The AMP Limited submitted that it supported the
aim of uniform regulation of financial products. The draft Bill was a
significant milestone in the process of financial services industry reform. It
was a legislative package capable of establishing the foundations for a
dynamic, evolutionary and expanding financial services sector in Australia. AMP
appreciated the extent of consultation that was undertaken and offered its
congratulations on this process and the extent to which the legislative
framework had been adjusted to meet the commercial realities of the modern
financial services industry; it was sensible, focussed dialogue on financial
sector reform. AXA Australia also broadly supported the reforms proposed in the
draft Bill. AXA advised that these were a welcome step in producing a globally
competitive and dynamic financial sector. The reforms should provide a strong
foundation for national economic and business growth and would help to position
Australia as a leader in financial services within the Asia-Pacific region.
3.4
NRMA Limited advised that it supported the
general thrust of the draft Bill, which was an important milestone for the
Australian financial services sector. The draft Bill would deliver significant
benefits both to the sector and to consumers. These benefits include
potentially lower costs from uniformity of regulation and greater consumer
confidence in the industry and its products. NRMA was pleased to note that the
draft Bill had addressed several areas of concern which it had raised earlier.
3.5
The Insurance Council of Australia (ICA) advised
that congratulations were due for the way in which this wide and complex issue
had been handled. The ICA was greatly encouraged that a number of its earlier
recommendations had been included in the draft Bill. Lloyds Australia Ltd
welcomed the draft Bill and supported its intention of a more efficient and
flexible regime for financial markets and products through an integrated
regulatory framework. The National Insurance Brokers’ Association (NIBA)
supported the proposed structure of the draft Bill, which should benefit
business and consumers. NIBA was particularly pleased that many of the earlier
comments and concerns had been addressed. The Australian Aviation Underwriting
Pool Pty Ltd advised that it supported the main elements of the draft Bill.
3.6
Telstra advised that it understood the impetus
for reform of the financial services sector and commended such radical action.
The reforms should have a positive impact on consumer confidence in using
online financial services. APIR Systems Pty Ltd submitted that the draft Bill
was a major contribution to the changing ecology of the financial services
environment which will provide an impetus to industry in the context of the new
market; the draft Bill replaces the present process driven regulatory regime
with one that is outcomes oriented and solidly based in commercial rather than
regulatory needs. The Australian Society of Certified Practising Accountants
(CPA) and the Institute of Chartered Accountants in Australia (ICAA) submitted
that they supported the underlying policy objectives of the framework of the
draft Bill.
3.7
The Australian Financial Markets Association
(AFMA) and the Securities and Derivatives Industry Association (SDIA) commended
the commitment to establish a comprehensive regulatory framework that
facilitates innovation and promotes business, while at the same time ensuring adequate
levels of consumer protection and market integrity; the draft Bill is a
watershed, significantly progressing the existing regulatory position.
Australian Stockbroking Limited submitted that the draft Bill was an ambitious
attempt to rationalise financial services law and, among other things, to
recognise the significance of electronic provision of financial services.
3.8
The Financial Planning Association (FPA)
submitted that it fully supported the intention of the draft Bill to introduce
a comprehensive regulatory framework and a single licensing system based around
universal principles that can be adopted to meet new developments. The
Investment and Financial Services Association Ltd (IFSA) submitted that the
draft Bill effectively implements the broad thrust of the Financial System
Inquiry reforms in the licensing and distribution of financial services. The
result should be to rationalise and modernise the regulatory and consumer
protection regimes for the financial services sector. IFSA strongly supported
the flexible and rigorous single licensing regime and the conceptual approach
of the financial product disclosure provisions. The Association of
Superannuation Funds of Australia Limited (ASFA) supported the general
direction of CLERP6. The Securities Institute of Australia (SIA) advised that
it supported the general concept of an integrated regulatory framework for
Australia’s financial markets, clearing and settlement facilities and financial
service providers, as recommended by the Financial System Inquiry. The
Association of Financial Advisers (AFA) supported the general thrust of the
draft Bill, advising that the change to one regulator and one set of regulatory
rules was especially important. The National Council of Financial Adviser
Associations (NCFAA) also supported the thrust of the draft Bill and was
pleased to note that many of the issues which it previously raised had been now
adequately covered.
3.9
BT Funds Management Limited offered
congratulations on the reform and rationalisation of the financial services
industry and in particular on the initiatives for a single licensing and
disclosure regime. Morgan Stanley Dean Witter (MSDW) advised that it supported
the thrust of the Financial System Inquiry; the draft Bill would effectively
implement many of the recommendations of that Inquiry. In particular, MSDW
supported the initiatives in the draft Bill which:
- promote the consistency of regulation of similar
financial products;
- increase the flexibility of the regulatory
structure to ensure that it is better able to cater for change, especially
technological change, within the financial system; and
- remove unnecessary and burdensome regulatory
requirements which add little to consumer protection and impose significant
compliance costs on industry participants.
3.10
The Deutsche Bank Group advised that it
supported the reform program and the positive changes which are being made to
the financial sector and markets. The Credit Union Services Corporation
(Australia) Limited (CUSCAL) supported the policy objectives of the draft Bill,
including a single licensing framework, better consumer protection and a better
informed financial services marketplace.
3.11
The Australian Conservation Foundation (ACF)
welcomed efforts to put in place a regulatory framework for the Australian
financial services industry, in particular the uniform disclosure obligations
for financial products provided to retail clients. The Finance Sector Union of
Australia (FSU) submitted that it generally supported the obligations which the
draft Bill placed upon licensees to ensure that competence, skills and
experience to provide financial services are maintained and that
representatives are adequately trained and competent.
Policy and drafting clarification of aspects of the draft Bill
3.12
As noted above, almost all of the submissions
received by the Committee supported the general thrust of the draft Bill. The
submissions, however, almost without exception, included detailed suggestions
for clarification of provisions of the draft Bill in relation to its intended
effect and to drafting. In this context the Committee noted the extensive
consultation process organised by the Treasury in the development of the draft
Bill. The process started in December 1997 with the release of an initial
position paper for public comment. In March 1999 a consultation paper sought
reaction to a more detailed outline of the proposals. The draft Bill and an
associated commentary was issued in February 2000 for comment by interested
parties. In April 2000 Treasury organised three roundtables with thirty
stakeholder representatives. Treasury has also had a considerable number of
direct meetings with interested parties since the release of the draft Bill.
3.13
Treasury officials advised the committee that
generally speaking reaction to the draft Bill had been positive, with most
comments relating to technical finetuning and drafting. In relation to these,
however, the officials advised that definitional comments could have a
substantial effect on whether a particular activity came within the ambit of
the draft Bill.
3.14
The Treasury officials also advised that it
would not be appropriate to announce any changes to the draft Bill or of policy
intention resulting from their consultations, in advance of any statement by
the Minister. The officials stated, however, that in general terms the final
Bill, which it was intended to introduce into Parliament early in the spring
sittings, would not be substantially different from the draft Bill. This was
because the comments received by Treasury were less to do with fundamental
policy issues and more to do with the drafting of individual provisions,
whether particular activities are included within these provisions and the
practical implications of this. The Government’s response to the concerns and
comments received during the public consultation process would be the final
Bill as introduced into Parliament. This response would be determined by
considering all comments in the light of whether the present drafting is
appropriate to achieve what was intended. If not, then the drafting of the
final Bill would be changed.
3.15
The 67 submissions received by the Committee
were well over 1,000 pages. As mentioned earlier, most of these were extremely
detailed, consisting mainly of comments on the drafting of specific provisions
and the possible effect of these on the individual stakeholder. It would not be
possible for the Committee to address all of these technical drafting concerns,
but it accepts that the Treasury has done so and that the final Bill will
clarify any provisions to ensure that the practical effect of the legislation
will mirror its policy intentions. The Committee has decided, therefore, to
highlight a number of the more important broad issues raised by the draft Bill
where it appears that changes could be made to its intent and drafting. The six
issues chosen are not intended to be an exhaustive survey of all unintended
consequences or possible anomalies in the draft Bill. Rather they were chosen
to illustrate the different interests of stakeholders across the whole spectrum
of the financial services sector and the need to ensure that drafting should
precisely reflect policy intent. The Committee has also decided to report as
early as possible, so that the Government’s response to its recommendations can
be included in the final Bill.
Navigation: Previous Page | Contents | Next Page
Top
|