{"title":"From Campbell to Hayne: W[h]ither Australia? Australian financial regulation and supervision at a cross-roads","authors":"David G Millhouse","doi":"10.1080/17521440.2019.1602696","DOIUrl":"https://doi.org/10.1080/17521440.2019.1602696","url":null,"abstract":"The Australian Government is in receipt of landmark advice: Heydon Royal Commission, Productivity Commission, and the Hayne Royal Commission. Each of them points to deep systemic and cyclical problems in the provision of financial products and financial services. Whilst the Hayne Royal Commission identified egregious behaviour in banks and large financial institutions, far greater economic damage has occurred in less well known sectors of the Australian financial system. Australian law regulating and supervising Non-Bank Financial Entities (NBFEs) has failed those it purports to protect: the vulnerable investing public. Systemic failure manifests in extraordinary loss of investor funds and nationwide economic damage. Without substantial law reform, this author predicts systemic deficiencies in regulation will remain, repeating their cyclical manifestations. Australia’s plight is not unique but no other nation with a sophisticated economy now suffers comparatively. Blame is being attached to the basic policy framework whereas in fact it is policy implementation and enforcement that has allowed systemic failures to manifest. Research demonstrates that inherent tensions between entrepreneurship and investor risk, optimal investor outcomes balanced with compliance, are not of themselves contradictory in a market based system, but they rely upon defining objectives, eliminating conflicts of objectives and conflicts of interest, significantly enhanced behavioural standards of market participants, and the de-politicisation of the regulatory environment. This analysis demonstrates that fiduciary principles are misunderstood, applied haphazardly, often ignored, and subservient to specific statutory and contractual provisions. Australia has a history of subsuming fiduciary principles behind statutory and contractual frameworks facilitating grudging disclosure and creeping corruption. Community expectations of what each market participant should do is often different from what they actually do. Hayne’s real message is the need to link law and morality, community norms and expectations with legal reality.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"81 - 98"},"PeriodicalIF":0.0,"publicationDate":"2019-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1602696","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60164755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Empirical analysis supports the Hayne long run reform thesis","authors":"David G Millhouse","doi":"10.1080/17521440.2019.1602923","DOIUrl":"https://doi.org/10.1080/17521440.2019.1602923","url":null,"abstract":"Australia has arguably benefited from its market based regulatory system and progressed toward its first objective of an entrepreneurial wealth creating society competing with its global peers; the second objective, being investment stability and risk mitigation, has for many people been an abject disaster. Proposed reforms to balance entrepreneurial market conduct with investor and beneficiary risk mitigation rely on themes established by Cooper (personal liability of superannuation trustee directors), Heydon (elimination of unhealthy culture), Hayne (confluence of law and morality) and the Productivity Commission (trust). The Australian government must act. It must do so strategically. It must establish the nexus between the intent of the law and its practical implementation for those it purports to serve. Parliament has yet to debate these underlying causes. If it does, then it must confront the distinction between fiduciary and non-fiduciary duties and recognise the power of fiduciary law. Confused parliamentary leadership has facilitated corruption of the regulatory system. These are philosophical as well as legal questions. Hayne points to the need for a framework for the re-integration of the intent and spirit of the law with its statutory manifestations. This paper is that framework.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"162 - 187"},"PeriodicalIF":0.0,"publicationDate":"2019-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1602923","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44778672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Hayne report – one giant leap forward for Australia","authors":"Terry A. Marsh, Gene Phillips","doi":"10.1080/17521440.2019.1605663","DOIUrl":"https://doi.org/10.1080/17521440.2019.1605663","url":null,"abstract":"We discuss the recommendations of the Royal Commission into Banking and its admirable restraint in avoiding the temptation to call for more regulation: the 2,300 page U.S. Dodd-Frank Act and its progeny have amply demonstrated the perils of that approach. We identify elements of the banking and advisory market that pose challenges in implementing the positive changes called for in the Commission’s Report, and potential solutions. We offer three favoured candidates for overcoming anticipated resistance to implementation: learning from the technology giants; creating a meaningful enforcement program; and building a regulatory measurement system that enables a broader spectrum of clients to better assess and compare providers’ performance.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"157 - 161"},"PeriodicalIF":0.0,"publicationDate":"2019-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1605663","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44213118","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Engage with Illicit Financial Flows","authors":"Alex Erskine","doi":"10.1080/17521440.2019.1603266","DOIUrl":"https://doi.org/10.1080/17521440.2019.1603266","url":null,"abstract":"Illicit financial flows is a concept which will influence legal and regulatory developments for financial markets for the next decade and beyond. This note is intended to alert the sector and its lawyers and help them engage with the concept and its practical evolution. United Nations member countries are moving to meet their commitments to achieving Sustainable Development Goals, which include reducing illicit financial flows by 2030. It outlines some of the decisions that need to be made to make effective the commitment. Actions to curb illicit financial flows are being discussed and implemented, both locally and globally. This perspective suggests that it will be rewarding if some in banking and financial markets help those seeking to curb illicit financial flows.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"250 - 253"},"PeriodicalIF":0.0,"publicationDate":"2019-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1603266","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42041388","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Causes and solutions for misconduct in the financial services industry","authors":"S. Turnbull","doi":"10.1080/17521440.2019.1602694","DOIUrl":"https://doi.org/10.1080/17521440.2019.1602694","url":null,"abstract":"This paper considers the efficacy of the Australian government's 2018 initiatives to counter widespread misconduct identified by its Royal Commission into misconduct in the banking, superannuation and financial services industry. As regulators exist to protect stakeholders, introducing stakeholders as co-regulators provides continuous intimate comprehensive identification of misconduct. The role, size, cost and intrusiveness of regulators are reduced. Regulators could use their discretionary powers to encourage firms to: (a) remove current unethical conflicts inherent in corporate constitutions; (b) establish constructive management of other conflicts; (c) provide independent voice to stakeholders for improving operations, competiveness, reporting misconduct, harms, risks or unsatisfactory service.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"113 - 99"},"PeriodicalIF":0.0,"publicationDate":"2019-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1602694","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42513958","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The dark side of licensing cryptocurrency exchanges as payment institutions","authors":"Hossein Nabilou","doi":"10.1080/17521440.2019.1626545","DOIUrl":"https://doi.org/10.1080/17521440.2019.1626545","url":null,"abstract":"The ultimate objective of cryptocurrencies is to become a payment system substituting, complementing, or competing with the conventional payment systems. Irrespective of whether such an objective could be accomplished, the functional similarities between certain cryptocurrencies and fiat money has persuaded competent authorities of certain EU Member States to grant payment institution licenses to cryptocurrency exchanges. At first blush, granting such an authorization would seem to be a step forward as it would bring otherwise unregulated cryptocurrency exchanges within the scope of the existing payment regulatory framework. However, this authorization effectively applies payment laws to new payment infrastructures that rely on volatile settlement assets with probabilistic finality. Since the volatility and finality risks cannot be fully addressed under the existing payment laws, an alternative policy option would be granting a special license to cryptocurrency businesses or introducing ring-fencing mechanisms to protect the conventional payment systems from the risks of cryptocurrency payments.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"14 1","pages":"39 - 47"},"PeriodicalIF":0.0,"publicationDate":"2019-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1626545","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41545517","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Credit intermediation and the European internal market for mortgage credit","authors":"Diederik Bruloot, Evariest Callens, M. De Muynck","doi":"10.1080/17521440.2019.1571667","DOIUrl":"https://doi.org/10.1080/17521440.2019.1571667","url":null,"abstract":"The European Mortgage Credit Directive (MCD) aims to create a Union-wide mortgage credit market with a high level of consumer protection. While focussing on the primary policy objective, i.e. facilitating the emergence of an internal market for mortgage credit, this paper analyses the MCD’s regulation of the activities of credit intermediaries, and the rules on establishment and supervision of credit intermediaries in particular. As professional middlemen, credit intermediaries could reduce information asymmetries between on the one hand creditors and on the other hand consumers. Against the background of Fintech intermediary disruption and the increasing importance of digital distribution channels for financial services, our paper analyses whether and/or to what extent the MCD’s prudential rules for credit intermediation qualify as true “enablers” for an Internal market for mortgage credit.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"20 1","pages":"41 - 53"},"PeriodicalIF":0.0,"publicationDate":"2019-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1571667","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60164742","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Resilience as the organising framework for reform: the dangers of metaphors in financial regulation","authors":"J. O'Brien","doi":"10.1080/17521440.2018.1560535","DOIUrl":"https://doi.org/10.1080/17521440.2018.1560535","url":null,"abstract":"As the Global Financial Crisis has demonstrated, fragility without purpose and vigilance is the defining characteristic of any complex system. The tentacles of the finance industry traverse state boundaries. They create moral and economic hazards as well as opportunities. Each poses legitimacy and authority implications. Failure to address those threats have contributed to a populist turn which, in turn, runs the risk of further policy uncertainty and instability. Responding to this crisis through resilience as both metaphor and organising framework is, however, problematic. The paper argues that notwithstanding its increasing usage, resilience is not a neutral concept. Privileging resilience as an end in itself may prove counter-productive unless underpinned by a normative reset of the purpose of the corporation and the market and duties and responsibilities each owe to society. It concludes that without clear definition of purpose and accountability regulatory structural form is irrelevant, as demonstrated by the failure of the twin peak model in Australia.","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"16 - 3"},"PeriodicalIF":0.0,"publicationDate":"2019-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2018.1560535","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43741881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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