Parliamentary Sludge

Last week, ASIC did something game changing:

… the chief corporate regulator threw out the 22-year-old rule book dictating fine print and product warnings should protect financial services consumers, in a move that prompted  the world’s top behavioural economists to light up on social media.

Wow.  The world’s top behavioural economists.  How exciting.

According to the AFR:

ASIC’s move is a seismic shift from the foundations laid by the 1997 Wallis financial system inquiry which dictated that disclosure was the foundation of an efficient financial system.

You know what else?  These foundations were embedded in law through the Financial Services Reform Act of 2001.

But who needs laws and parliaments when the world’s top behavioural economists get jiggy with it on social media.

But it’s not just the world’s top behavioural economists who got excited:

Liberal MP and free marketeer Jason Falinski “loves” behavioural economics and says “this is a massive step in the right direction by ASIC”.

Falinski.  Free marketeer.  LMFAO!  But according to Falinski:

It’s not the role of the Parliament, the regulator or the corporation who can or cannot buy their product (sic).

We wait to hear Falinski’s views on tabacoo, drugs, vaping and other.  But notwithstanding.  Falinksi also says:

The issue is ASIC is not going far enough in sweeping disclosure away and it is building on top of a system that doesn’t work.

Unfortunately Mr Falinski MP, it is not within the power of ASIC to do so.  It requires an act of parliament.  You know those fiddly law things you are supposed to read and vote on.

This whole behavioural economics and disclosure stuff may have merit.  Who knows.  But on whose authority does ASIC claim the power to change laws?  Or to ignore laws and do whatever the hell it wants?

If Parliament wants to delegate such powers to ASIC and other regulators, TAFKAS would opposite it.  But if such laws are passed, what the hell do we need Parliamentarians for, particularly Parliamentarians of the skill and judgement of the Falinski the Free Marketeer?  If you aren’t legislating, what are you doing?

Maybe there is a Morrison Government plans for delegating legislating to regulators?  It will fit neatly within its central plan.

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8 Responses to Parliamentary Sludge

  1. Percy Popinjay

    “behavioural economics” is a steaming pile of horse manure.

  2. Tim Neilson

    If you aren’t legislating, what are you doing?

    Refraining from legislating might be a good alternative.

    Or reviewing the whole legislative morass and repealing anything without obvious benefits.

  3. Bruce of Newcastle

    Sounds like ASIC is smarting after their abject faceplants at the hands of IOOF and Westpac.
    I diagnose a severe case of RDS and threats to their budget. How sad.

    ASIC won’t be cowed by IOOF, Westpac rulings (23 Sep)

  4. Pyrmonter

    Is Falinski (a backbencher, and hardly the worst one) the problem, or is it ASIC?

  5. Pyrmonter

    @ Tim, @ TAFKAS

    The problem with ‘you’re legislating’ is that, well, that’s what Parliament has authorised them to do. We might legitimately ask why Parliament can’t do this sort of thing itself, rather than have ASIC issue ‘legislative instruments’:

    1023D ASIC may make product intervention orders

    Making product intervention orders

    (1) Subject to subsection (5), if ASIC is satisfied that a financial product:

    (a) is, or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and

    (b) has resulted in, or will or is likely to result in, significant detriment to retail clients;

    ASIC may, in accordance with this Part, order that a specified person must not engage in specified conduct in relation to the product, either entirely or except in accordance with conditions specified in the order.

    Note 1: An example of conditions that may be specified in a product intervention order include that the product not be issued to a retail client unless the retail client has received personal advice.

    Note 2: Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.

    Note 3: Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.

    (2) An order under subsection (1) is not a legislative instrument.

    (3) Subject to subsection (5), if ASIC is satisfied that a class of financial products:

    (a) is, or is likely to be, available for acquisition by issue, or for regulated sale, to persons as retail clients (whether or not it also is, or is likely to be, available for acquisition by persons as wholesale clients); and

    (b) has resulted in, or will or is likely to result in, significant detriment to retail clients;

    ASIC may, in accordance with this Part and by legislative instrument, order that a person must not engage in specified conduct in relation to the class of products, either entirely or except in accordance with conditions specified in the order.

    Note 1: An example of conditions that may be specified in a product intervention order include that a product in a class of products not be issued to a retail client unless the retail client has received personal advice.

    Note 2: Section 1023E specifies matters to be taken into account in considering whether a financial product has resulted in, or will or is likely to result in, significant detriment to retail clients.

    Note 3: Section 1023N also provides that product intervention orders may include requirements for notifying retail clients.

    Restrictions on product intervention orders

    (4) A product intervention order must not specify any of the following for subsection (1) or (3):

    (a) a condition that a person satisfy a standard of training, or meet a professional standard, other than a standard otherwise prescribed for the person by or under this Act;

    (b) a condition that a person who is not required to hold an Australian financial services licence become a member of an external dispute resolution scheme;

    (c) a condition related to a person’s remuneration, other than a condition related to so much of the person’s remuneration as is conditional on the achievement of objectives directly related to the financial product.

    (5) Conduct covered by a product intervention order must be limited to conduct in relation to a retail client.

  6. Nob

    Isn’t all economics “behavioural”?

    I mean it might be predictable, inasmuch as human behaviour is fairly predictable, but it’s not subject to immutable laws like physics.

    Asking for a friend who knows SFA about economic theory except what he gleaned from these pages and a lifetime actually working in the actual “economies” of several actual industries in several actual countries.

  7. Rob MW

    Wow. The world’s top behavioural economists. How exciting.

    I presume that a ‘behavioural economist’ is a ‘Shrink’s’ view of economics without the application of ‘Murphy’s Law’ – the law governing fuck-ups by omission – and most usually associated with government commissioned findings of some sort of report that advances a policy narrative guaranteed to regulate the fuck-up beyond all recognition. Extreme ball twisting.

  8. Art Vandelay

    “behavioural economics” is a steaming pile of horse manure.

    Spot on. Behavioural economics seems to attract a certain type of person; ie, insufferable prats who think they know better than anyone else and see this branch of economics as a way of advancing their (usually taxpayer-funded) position amongst the elite.

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