The financial services industry is wading in more red tape despite attempts by the Federal Government to cut regulation for business, according to a leading financial services regulation lawyer.
Allens Partner Michelle Levy said the Federal Government should be applauded for its moves to repeal unnecessary and costly legislation and regulations. However, these cuts have yet to be felt by the financial services industry.
'The Government says it has made $700 million in savings already in 2014, but none is evident in the financial services industry,' Ms Levy said.
'Instead, the industry is wading in more and more regulation and there is no end in sight – the Financial System Inquiry is unlikely to result in less regulation of the sector.'
Ms Levy said that it was a very live question whether existing financial services regulation not only added cost, complexity and uncertainty to providers but also whether it served the interests of those it is intended to protect.
'Stronger Super promised better retirement incomes for members, FoFA better advice for the Australian public and 8-page PDSs better informed consumers. Although it is very early days, we see little evidence that any of these promises will be achieved.
Ms Levy said the major concern now was whether the existing regulation of the industry was unravelling under the weight of red tape.
'Fund managers are overwhelmed by requests to provide (and often recreate) information to superannuation funds so that trustees can comply with their APRA reporting obligations.
'Product issuers jump through hoops to prepare 8-page PDSs that no-one wants, no one reads and no one understands. As for FoFA – it is a mess.
'Regulation has not merely added cost and process in the financial services industry, it has created very real difficulty – the industry is, in many areas, left trying to make sense of the nonsensical.'
Ms Levy was commenting after joining Allens, having moved to the firm from King & Wood Mallesons. She has been joined at Allens by Senior Regulatory Counsel Michael Mathieson, Senior Associate Simun Soljo and Lawyer Rosie Thomas.
The team will strengthen the firm's expertise in life insurance, superannuation, the distribution of financial products and M&A transactions in wealth management.
Ms Levy said that her views have been informed by the recent work the team has been doing with the wealth management areas of the major banks, life insurers and industry funds on their Stronger Super and FoFA projects.
'These have been major projects for all of our clients involving all aspects of their businesses. We have worked closely with ASIC and APRA, and the team has been involved in consultation with Government and Treasury as well as industry bodies.
'We have also been helping our clients with new products and new distribution methods – for example guaranteed retirement income products, investment products and new insurance arrangements. The new regulatory environment, changing demographics, and new technology creates enormous opportunities for new ideas and innovation. It is terrific working together with our clients on these projects.'
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Notes for editors.
Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.