The key to simplifying regulation and cutting overly burdensome red tape is encouraging the community, industry and Government to work together, says Federal Parliamentary Secretary to the Treasurer Chris Pearce.

Mr Pearce ­– who has been the key figure in developing the Federal Government’s proposed refinements to the Financial Services Reform Act – told a KPMG financial services conference in Sydney last week that the Government alone can’t address problems with regulation; it needs the assistance of the industry and the community to know which direction to head in.

He says it’s only with the support of these groups that it can “critically assess where we are, and where we want our regulatory framework to be”.

“Business can assist in a number of ways,” Mr Pearce said. “Primarily, business can reduce red tape to which it’s subject by supporting appropriate commercial conduct.”

And he says the industry can “assist itself” by implementing self-regulatory mechanisms such as codes of conduct, and accepting that “principles-based legislation will not mandate specific conduct”.

Mr Pearce told delegates the community can assist in reducing regulatory red tape by embracing financial literacy education and accepting that “everything in life carries some degree of risk”.

“The community can build on this by supporting a non-interventionist attitude from the Government.”

Mr Pearce is one of the few federal politicians who seems to have recognised the industry’s desire for a “lighter-touch” regulatory system. He says he believes in “striking the right balance between regulation and risk”.

“As a parliamentarian, I wholeheartedly support light-touch, principles-based regulation and I prefer substance over form,” he said. “But from my own experience, I know that it’s difficult at times to sustain this approach. It’s particularly difficult to advocate light-touch regulation in the face of legitimate public pressure to act swiftly and decisively to stamp out egregious corporate conduct.”

Mr Pearce says it’s also hard for the Government to “maintain a hands-off approach in circumstances in which business seeks guidance and more so, certainty”.

He told the conference he is “yet to meet anyone who disagrees with the fundamental objectives of the financial services regulations”, and that it’s the day-to-day issues surrounding the legislation that need fine-tuning.

He expects to release the draft regulations for public consultation “very soon” and to have them in place by the end of the year. “I am firmly committed to the process of productive consultation.”