Regulation can go too far: report
Australia should resist excessive re-regulation of the financial sector which would be an over-reaction to corporate collapses such as HIH, according to the Financial Sector Advisory Council. The council says prescriptive regulation could cost business investment opportunities. Although the council notes that the HIH collapse would not have had such a large impact on the insurance industry had the regulatory framework been stricter, FSAC says the Federal Government should not indulge in knee-jerk responses or “over-reactions”.
The FSAC report also echoes complaints from business about the burdens imposed by the Financial Services Reform Act and Clerp 9 corporate reforms. It also highlights tensions among the Reserve Bank and the ACCC over reforms to the payments system. On the interchange fees issue, for example, multiple regulators are involved with possibly insufficient clarity on their roles. FSAC says the RBA's changes to the credit card market will probably deliver “efficient pricing signals” to consumers and retailers but the RBA should take a back seat in the reform process.