Lawyers await response regarding the new financial services reforms

Most of the partners at major law firms in Australia have given positive appraisals for the long-awaited response from the Australian government regarding the Financial System Inquiry (FSI). Lawyers working with the financial services sector expect their lives to be made a little easier when a staged approach and a clear reform trajectory is put in place towards the new implementation. On the other hand, given that this is an industry where people get subjected to one type of reform after another, lawyers working in this field all talk about reform fatigue. The reason behind this is because they are arguing that the reforms never come to an end.

Because the government has been talking about the reforms with the financial sector for a very long time, the FSI response contains no big surprise unlike previous reforms. Therefore, lawyers have had ample time to prepare for the new reforms because they knew that they were coming. The majority of 44 recommendations made by the inquiry in its 2014 report have all been supported by the government’s response released on 20 October, 2015. The Inquiry was formed in 2013 and it is chaired by David Murray. Its main objective is to promote economic growth by suggesting substantial changes to the financial system.

The recommendations made by the Inquiry vary and they include a crackdown on stronger capital ratios for big banks, superannuation reform and excessive surcharges for credit card transactions. “Regulatory changes such as these nearly always create market opportunities,” said Berkeley Cox, who is also a managing partner of banking and finance at King & Wood Mallesons. He also said that in order to get the ability to help their clients shape and design the impacts and benefits that they get from these reforms, their law firm has always kept ahead of what’s next.

“It was difficult to give a combined answer to how the reforms may affect finance and banking lawyers,” said Ms Gilardoni. She also added that in order to protect consumers, lawyers working in this industry will be forced to comply with the requirements made in the changes. In addition, lawyers working in compliance particularly will have to deal with the brunt of some of these changes because they impact different areas differently. “Therefore, a requirement that surcharges be reasonable would influence the kind of advice that I give clients in my own practice, which focuses on payments,” she said.

“The government’s response will be a very positive development ending a period of uncertainty in the financial sector,” said Richard Batten, who happens to be a partner at Minter Ellison. He said that the reforms have the potential to achieve its objectives since it is designed to facilitate innovation and make the system safer. “Together, these goals could transform the financial sector over the next decade,” said Mr. Batten. He concluded by saying that a number of the reforms were well overdue, including allowing for product rationalization and removing superannuation from workplace determinations and enterprise agreements.