Financial services legislation and regulatory complexity is making it difficult for people to understand their legal obligations, the Australian Law Reform Commission (ALRC) has warned.

“There is a lot of complexity in our regulatory ecosystem, but there is also significant scope for simplification of that ecosystem that would bring very real and widespread benefits for the community.” ALRC Legal Officer Nicholas Simoes da Silva told a seminar last week.

The ALRC held the introductory seminar as part of a three-year review aimed at simplifying the Corporations Act and its surrounding framework. A second seminar will be held this later this afternoon looking at comparative international approaches.

The ALRC says the Act, which covers insurance and other financial services, is now more than 800,000 words long after a series of amendments, compared with around 500,000 when introduced in 2001.

What should be clear has become “obscured behind voluminous rules” while the use of definitions, conditional statements and the addition of numerous related legal instruments have added to problems.

“It makes the law highly inaccessible and significantly increases the costs of answering even simple legal questions,” Mr Simoes da Silva said. “Complexity matters, it affects us all.”

The ALRC will release three interim reports on separate issues during the review, with a final consolidated report to be delivered by November 30 2023.

National Insurance Brokers Association (NIBA) CEO Dallas Booth says the “elephant in the room” is the one-size-fits-all approach taken across Chapter 7 of the Act, which applies to financial services.

“One size almost never fits all and I think that is something the law reform commission is going to have to think about as part of this project,” he told insuranceNEWS.com.au.

NIBA has met with the ALRC and supports reforms to simplify and clarify the legal framework around insurance and broking.