The Financial Services Reform Act (FSRA) came into effect a year ago last Friday. And even though most industry professionals would say high compliance costs are their main problem with the legislation, the Government is primarily looking for change comes in the consumer protection area.

The need for complex documentation and verbal advice when providing financial services since the FSRA came into effect on March 11 last year has led to complaints from practically every financial services organisation, including the major banks and representatives of the insurance and financial planning industries.

While there is evidence the quality of disclosure documents has improved as the industry familiarises itself with the FSR regime, even the Federal Government has acknowledged it is incurring high costs and is not necessarily benefiting consumers.

New Parliamentary Secretary to the Treasurer Chris Pearce told an Australian Securities and Investments Commission (ASIC) conference last month that while he senses “strong and unanimous support for the basic principles that underlie the FSR disclosure regime”, he has heard claims that the cost of complying with the FSR disclosure outweighs potential benefits to consumers.

“I’m aware of strongly held views in a few quarters that the requirements have resulted in such lengthy and complex documents that consumers are actually worse off than if they received no information at all,” he said.

But Mr Pearce says the regime’s high costs are probably the result of “an excessively cautious approach” to a new regulatory framework.

Mr Pearce says he is working on a series of proposed refinements based on feedback received from industry and consumer representatives, Treasury, ASIC and the Financial Sector Advisory Council.