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Hockey introduces Financial Services Reform Bill.



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MINISTER FOR FINANCIAL SERVICES AND REGULATION

NO. FSR/025

Hockey Introduces Financial Services Reform Bill

The Minister for Financial Services & Regulation, Joe Hockey, today introduced legislation that will revolutionise financial services in Australia.

The Financial Services Reform Bill will directly benefit the 330,000 people employed in the industry and will directly benefit the 17 million consumers of financial products in Australia.

The Bill provides the financial services industry, with an unprecedented opportunity to become a major exporter of services to 3 billion people in Asia and other jurisdictions around the world.

The Bill will replace the current fragmented regulation with a harmonised regime that will ensure a consistent level of market integrity and consumer protection across the financial services industry.

The Bill proposes three key reforms.

A harmonised licensing, disclosure and conduct framework for all financial service providers. ● A consistent and comparable framework for financial product disclosure. ● A streamlined regulatory regime for financial markets and clearing and settlement facilities. ●

For consumers, the Bill will:

introduce a consistent framework of consumer protection across the financial services industry. ● help consumers understand and compare different financial products. ● ensure that consumers have access to efficient complaints handling procedures for resolving disputes with financial service providers. ●

For industry the Bill will:

cut compliance costs and remove regulatory barriers to the introduction of technological innovations. ●

provide a boost to e-commerce by facilitating the electronic delivery of a range of financial services and products. ●

The financial services industry has welcomed the reforms proposed in the Bill and many industry participants are keen for the new regime to start at the earliest opportunity.

In addition, the Bill will substantially simplify the procedure for the licensing of markets and clearing and settlement facilities and introduce a level playing field in relation to ownership limitations applying to markets and clearing and settlement facilities.

The current 5 per cent ownership limitation applying to the Australian Stock Exchange Limited (ASX) will be removed and in its place a 15 per cent limit will be applied to those markets and facilities that are

of national significance and prescribed under the regulations.

It has previously been announced that the ASX will be prescribed for the purposes of the 15% limitation.

As Australia’s only futures exchange and in recognition of the importance of this exchange to Australia and the Asian region more generally, it is also intended that the Sydney Futures Exchange Limited (SFE) be prescribed.

The Bill also makes provision for the 15% ownership limitation to apply to holding companies of Australian market licensees and clearing and settlement facilities that are of national significance.

The Minister indicated that to allow sufficient time to consult on the regulations to be made under the Bill and to enable the Australian Securities and Investments Commission and industry to gear up for commencement, he now proposed to start the two year transition period from 1 October 2001.

The transitional arrangements will be contained in a separate Bill to be introduced in the Winter sittings of Parliament.

The regulations would be subject to a thorough consultation process, and the Treasury will establish an FSR Implementation Consultative Committee to consider the regulations.

A range of industry and consumer representative bodies will be invited by Treasury to nominate hands-on practitioners to help in considering the regulations.

The Minister also announced that the Government is calling for submissions from industry participants on the potential tax consequences for existing industry participants of moving to the new licensing regime contained in the Bill. Submissions on this issue should be provided to the Financial Markets Division of the Treasury by 31 May 2001.

The Financial Services Reform Bill is available at www.treasury.gov.au

5 April 2001

Media contact: Matthew Abbott, Minister's office, 02 6277 7230, 0413 076 213  

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