This page highlights some of the research work undertaken by centre members that has had a direct impact on the improvement of laws and regulations regarding corporations and the financial market.
Dispute Resolution in the Financial System
In 2016-2017 Professor Ian Ramsay chaired the independent panel appointed by the Australian Government to review the financial system’s external dispute resolution and complaints framework. The panel published two issues papers, an interim report and two final reports: Review of the Financial System External Dispute Resolution and Complaints Framework, Final Report, Commonwealth of Australia, 2017, 246 pages and Review of the Financial System External Dispute Resolution and Complaints Framework, Supplementary Final Report, Commonwealth of Australia, 2017, 204 pages. The panel made 11 recommendations in its final report. All these recommendations were accepted by the government. In February 2018 the Australian Parliament passed the Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth) which enacts the recommendations. In November 2018 the Australian Financial Complaints Authority commenced operation.
ASIC Enforcement Review Taskforce
In 2016-2017 Professor Ian Ramsay was appointed by the Australian Government to be a member of the Australian Securities and Investments Commission Enforcement Review Taskforce. During the review, the taskforce published 8 consultation papers on matters including the level of penalties for corporate and financial sector misconduct, ASIC’s power to ban individuals working in the financial sector, ASIC’s licencing powers, search warrant powers, and industry codes in the financial sector. In December 2017, the taskforce submitted its final report with recommendations to the Government. On 20 April 2018, the Commonwealth Treasurer, the Hon Scott Morrison MP, announced that the Government had agreed to all 50 of the Taskforce recommendations and would prioritise the implementation of 30 of the recommendations. In February 2019 the Australian Parliament passed the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2018 (Cth) which enacts the recommendations.
Australian Securities and Investment Commission Enforcement Policies, Processes and Decision-Making procedures Review
In 2018-2019 Professor Ramsay was appointed by the Chair of the Australian Securities and Investments Commission to be a member of the ASIC Enforcement Policies, Processes and Decision-Making Procedures Review. The terms of reference for the review stated that it should identify what changes should be made to ASIC’s enforcement policies to ensure they are aligned with internal and external expectations of ASIC and ensure ASIC obtains enforcement outcomes that are necessary for a fair, strong and efficient financial system for all Australians. The Review should particularly focus on policies, processes and decision-making procedures relevant to:
- whether or not to enforce the law using criminal and civil proceedings or other regulatory options; and
- the effectiveness and timeliness of the conduct of litigation and of enforcement outcomes.
The review submitted its report to ASIC in January 2019. In February 2019 ASIC announced that it had adopted the recommendations in the report including the establishment of an Office of Enforcement within ASIC.
Equity Crowdfunding in ASEAN
In 2016 Professor Ramsay was appointed by the Association of Southeast Asian Countries (ASEAN) as the consultant for the project on facilitating equity crowdfunding in ASEAN. In August 2017, ASEAN published Professor Ramsay’s co-authored report: Facilitating Equity Crowdfunding in the ASEAN Region (155 pages). The report is a detailed discussion of equity crowdfunding including the legal issues associated with this type of funding. The report provides a series of recommendations for member states of ASEAN which have not yet introduced equity crowdfunding on the key issues they should consider in designing a regulatory framework for equity crowdfunding. Prior to publication of the report, a two-day roundtable meeting on equity crowdfunding was held in May 2017 in Kuala Lumpur to consider and discuss the findings and recommendations in the draft report. Representatives from all ASEAN countries were present to hear Professor Ramsay present the findings of the research.
Legislative and Regulatory Complexity
The complexity of the Corporations Act 2001 (Cth) presents many challenges. These challenges include the costs that complex legislation imposes on the business community and on ASIC (Australian Securities and Investments Commission). This research investigated the increasing complexity of the Corporations Act from 1981 to 2015, and the regulatory burden caused to ASIC and to businesses. (Research article, Chia, H X and Ramsay, I, ‘Section 1322 as a Response to the Complexity of the Corporations Act 2001 (Cth)’, (2015) 33 Company and Securities Law Journal 6.
These research findings were cited in support of legislative reform to reduce regulatory red tape, in the 2015 capability review of ASIC (ASIC Capability Review: Report to Government pages 134-135).
Consumer protection: Reform of consumer lease contracts
Consumer leases can be an expensive and unhealthy form of consumer credit with some lenders targeting financially vulnerable consumers. This project investigated the experiences of consumers with consumer leases, and evaluated potential reforms to the regulations to ensure greater protection for consumers. (Research paper Consumer Leases and Consumer Protection: Regulatory Arbitrage and Consumer Harm (2013) by Paul Ali, Cosima McRae, Ian Ramsay and TJ Saw)
This research informed the Department of Treasury’s review of small amount credit contracts and consumer leases in 2015-2016 ( Department of Treasury, Review of the small amount credit contract laws, Consultation Paper, September 2015, p 36; Department of Treasury, Review of the small amount credit contract laws, Interim Report, December 2015, pp 12 and 26; and Department of Treasury, Review of the small amount credit contract laws, Final Report, March 2016, p 99)
Regulating Fraudulent Phoenix Activity
Fraudulent phoenix activity occurs where there is the deliberate liquidation of a company to avoid paying debts, but the business continues through another company. This causes huge losses in taxation revenue and large financial losses for employees and unsecured creditors. This research project aims to determine the optimal method of dealing with fraudulent phoenix activity, through a thorough examination of all of its aspects in Australia and by a comparative analysis of international responses.
Research findings have resulted in multiple submissions to government on ways to improve the regulation of fraudulent phoenix activity. See details about submissions on ‘Regulating Fraudulent Phoenix Activity’.
Financial Literacy Project
The Financial Literacy Project was the first in-depth study of the relationship between financial literacy and Australia's financial services and consumer protection laws. Through empirical research, the project contributed to a broader understanding of the role of financial literacy and consumer behaviour in Australia. See details about the project ‘Financial Literacy Project’.
The research team was invited to submit the summary results of the project for the Australian Securities and Investments Commission National Financial Literacy Strategy Review and Consultation Paper 'Shaping a National Financial Literacy Strategy for 2014-16'. Further information about the Financial Literacy Strategy Review is available here.
Employee Share Ownership Plans: Current Practice and Regulatory Reform
Employee share ownership plans (ESOPs) are important to the development of enterprise and innovation and the building of national wealth and savings. This project produced the first comprehensive analysis of how legal regulation structures and constrains the use of ESOPs in Australian enterprises. It examined the incidence and forms of ESOPs in Australia, the diversity of objectives that such schemes serve, the extent to which corporate, tax and labour law inhibit ESOPs, and the case for reform of the regulatory framework. This research enhances the capacity of policy makers to evaluate and identify appropriate regulatory techniques to ensure the growth of efficiency of ESOPs at the national and enterprise level.
Research findings from this project have resulted in multiple submissions to the government on reform of taxation of employee share schemes. See details of the project ‘Employee Share Ownership Plans: Current Practice and Regulatory Reform’.
Reform of the Australian Communications and Media Authority (ACMA) enforcement powers
In 2004, the ACMA asked Professor Ian Ramsay to examine the effectiveness of the ACMA’s existing enforcement powers and consider whether any reforms were needed in relation to these powers. His report formed the basis of the Government’s consideration of reforms to the ACMA’s broadcasting regulatory powers.
The report, Report for the Australian Communications and Media Authority on Reform of the Authority's Enforcement Powers (2005) by Ian Ramsay, made various recommendations to enhance the regulatory powers of ACMA by giving it new powers to impose civil penalties, injunctions, enforceable undertakings and infringement notices. These recommendations resulted in new legislative powers for ACMA, see details in the Explanatory Memorandum to the Communications Legislation Amendment (Enforcement Powers) Bill 2006.
Reforming Not-for-Profit Regulation
This project examined the appropriateness of existing corporate legal frameworks as they apply to not-for-profit (NFP) companies. It challenged the application of laws designed for companies with profit making objectives to NFP organisations. The project considered the issues of reporting and accountability to NFP stakeholders and how these stakeholders (and their needs) differ from those of stakeholders in 'for-profit' companies.
As a result of research findings, the research team recommended the establishment of a uniform regulatory regime for Incorporated Associations nation-wide, and made multiple submissions to government during legislative reviews in 2004. See details on the ‘Reforming Not-for-Profit Regulation Project’.
Dollar Disclosure of Fees in Managed Investments
In 2002 Professor Ian Ramsay was requested by ASIC to review the disclosure of fees and charges for managed investments, in Product Disclosure Statements (“PDSs”) and member or investor periodic statements. The report reviewed Australian disclosure requirements as well as international disclosure requirements, and proposed a number of options for improved disclosure. See the report Disclosure of Fees and Charges in Managed Investments (2002) by Ian Ramsay.
These recommendations were adopted in the Financial Services Reform Amendment Act 2003, and Prof Ramsay’s recommendations were discussed during the senate debate on the Financial Services Reform Bill 2003 (4 December 2003).
Prof Ramsay’s recommendations were also adopted by ASIC in the development of their fee disclosure model, see details in ASIC's media release.
Independence of Australian Auditors
In 2001 Professor Ian Ramsay conducted a review of the independence of company auditors, commissioned by the Minister for Financial Services and Regulation. The review was prompted by the view that Australian standards for regulating auditors had fallen behind international standards, and following the high profile failure of several major Australian companies with associated debate about perceived failures of auditor independance.
The review examined ways of limiting opportunities for conflicts of interest to arise in the performance of audits, and recommended several measures to restrict employment and financial relationships between auditor and client. Recommendations were made also to improve auditor supervision, disciplinary arrangements, auditor appointment and removal, and auditor accountability. Read the full report Independence of Australian Company Auditors (2001) by Ian Ramsay.
These recommendations were adopted in the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004. See also discussion of Prof Ramsay’s recommendations in the Parliamentary Joint Committee on Corporations and Financial Services Report, CLERP (Audit Reform and Corporate Disclosure) Bill 2003: Part 2 Financial reporting and audit reform (June 2004).