The Australian Law Reform Commission (ALRC) has finalised proposals to revamp “convoluted” financial services laws following the completion of a three-year inquiry.

The ALRC makes 58 recommendations in its final report on reforming existing arrangements, which it says are a “tangled mess”, difficult to navigate, costly to comply with and unnecessarily difficult to enforce.

“Parts of the legislative framework have variously been described as ‘porridge’, ‘obscure and convoluted’, ‘shrouded in obfuscation’ and likened to a maze,” a summary says.

The ALRC has released three inquiry interim reports, with some 13 recommendations already implemented in full or in part by legislation passed last year. The final document, tabled in Federal Parliament yesterday by Attorney-General Mark Dreyfus, contains further proposals to remove complexity.

“The reforms outlined in this report will make these laws easier to understand and navigate, drive down the costs associated with complying with the law, and make it easier for consumers to understand and enforce their rights,” ALRC President Mordy Bromberg said.

The proposals involve bringing together financial services provisions in Chapter 7 of the Corporations Act and Part 2, Division 2 of the Australian Securities and Investments Commission (ASIC) Act, which deals with “unconscionable conduct and consumer protection in relation to financial services”.

A “Financial Services Law” would become the primary legislation containing the key regulatory provisions, and it would appear as Schedule 1 of the Corporations Act.

A single “Scoping Order” legislative instrument would contain the vast majority of exclusions and exemptions and other detail necessary for adjusting scope, replacing hundreds of regulations and ASIC legislative instruments that currently exist.

The reforms would end the use of “notional amendments”, which are “almost invisible”, and instead use thematic consolidated rulebooks, providing detail on how to comply and giving flexibility for regulating particular products, persons, services or circumstances.

The ALRC also recommends making it easier to tell when something is a financial product or financial service by introducing a single, simplified definition of both terms.

Offence and penalty provisions would be made less complex and more obvious by consolidating them into a smaller number of provisions that cover the same conduct.

The Financial Services Law wouldn’t replace every piece of primary legislation that currently regulates financial services, with other separate laws including the Insurance Contracts Act.

“However, compared with the existing legislative framework, the Financial Services Law would provide a clear home for the primary legislation that applies generally to financial products and financial services,” the report says.

Since 2001 the Corporations Act has almost doubled in length to more than 4000 pages and more than 800,000 words, while Chapter 7 alone has almost doubled to 265,000 words, making it similar in length to the novel Ulysses by James Joyce.

The ALRC says it's likely policy developments affecting financial services “will continue apace” and the proposed new framework should be better able to adapt to changes.

Recommendations include that the Federal Government should establish a specifically resourced taskforce, or taskforces, to oversee introduction of the changes.

“The reforms we’re proposing are broadly supported by stakeholders and if implemented will see substantial improvements for both consumers and business,” Justice Bromberg said.

The report, Confronting Complexity: Reforming Corporations and Financial Services Legislation, is available here.