Statutory, Co-regulatory, and Self-regulatory frameworks in Australia

Answer 1

Statutory framework represents written legislations and the amendments need to be carried out by following a systematic process. Statutory frameworks exists to protect consumers, the environment and the community as well as promoting fair practices. The Australia Competition and Consumer Commission (ACCC) presents a key example of independent statutory authority or commission tasked with ensuring the enforcement of the Competition and Consumer Act among other legislations that ensure fair competition or trade. ACCC represents the statutory frameworks in practice. The advantages of the statutory framework involves the idea that they are strictly enforced and cannot be changed and involve organizations such as ACCC to ensure compliance or full enforcement. . They require a procedure to be followed in order to amend it. One of the major drawbacks associated with this framework is that if the rules and regulations need to be changed, the process is very time consuming and tedious. It involves a lot of steps and procedures to be followed for bringing any amendment.

Co-regulatory frameworks involves framework that allows industry players to assume responsibility for regulatory detail within their sectors and is based on clear legislative obligations; however, the regulator maintains the powers. The example of the Australian Securities & Investment Commission (ASIC),demonstrates a key example of co-regulatory framework where industry players help the commission in ensuring effective and efficient regulation to ensure compliance with set policies. The key advantages of the framework involves ensuring effective compliance and inclusion of the key stakeholders in regulation implementation. The framework also helps remove redundant regulation and reducing regulatory reporting. Additionally, it allows market-based solutions and helps provide ideas or support on policy development. However, it limits intervention flexibility and improvement processes.

On the other hand, Self – regulatory framework is characterized by the rules and codes of conduct formulated and followed by the industries. The industry, itself, is responsible for the enforcement of these laws. The industry formulates manages, enforces and amends these laws. The government has no role to play in it. For example – Australian Securities & Investment Commission (ASIC), formulated its own bureau for establishing its rules and codes of conduct to hear the complaints about financial aspect of every organization. The advantage of self-regulatory framework is that representatives from the profession are involved in making judgements over complicated matters and they decide what is acceptable and what is not.  Regular judges do not make any judgements.  In today’s time self-regulation has emerged in the internet age which is based on certain codes of practice that basically regulates issues like public which makes the regulator critical  in ensuring compliance with the financial laws (Castro, 2011).

Advantages and disadvantages of each regulatory framework

Answer 2

The Australia Competition and Consumer Commission (ACCC) represents one of the key examples of a regulator that uses statutory model by providing increased transparency and accountability to achieve the statutory objectives. It also achieves the objective by identifying ways in which the policy agencies do not impede the efficient operation of the regulated entities. Additionally, it achieves the objective by improving communication with the regulated entities. Other actions involves ensuring the regulators are open and transparent when dealing with the regulated entities. Besides, ACCC contributes to the improvement of the regulatory frameworks and streamlining/coordination of the compliance and monitoring processes.

An example of a regulatory that utilizes a co-regulatory model involves Australian Securities & Investment Commission (ASIC), which involves the industry stakeholders in the regulatory process. It follows a co-regulatory model where the industry players establish their own policies aligned with the ASIC and ensures the compliance of the regulators policies. It ensures compliance with the financial services law between the investors, consumers and creditors.

Answer 3

Investing in property is the most favoured investment as property investment in Australia’s residence is safe haven and the ‘great Australian dream’.  One can directly invest in residential property that will generate rent or invest in commercial property and give it out on lease for a certain period of time.  The property market is booming across the metros and the house prices are rising especially in Sydney, Melbourne, Brisbane, etc. so, property investment is the first option of Australians which has never seen a downward trend(Beattie, 2016).

The second investment that provides stable and reliable return is investing in government or corporate bonds.  When one invests in government bonds, the government returns it with interest.

Investing in equities is another option but, it has high risk depending on what equities one chooses.  Recently, share market volatility has increased  the current Euro crisis, and hence, there is shift in income balance from investors in shares and fixed deposits(Pedersen-McKinnon, 2012).

Answer 4

Australian Prudential Regulation Authority (APRA) is the regulating body of the Australian financial service industry.  It oversees the general and private health insurance, banks, life insurance, credit unions, insurance and reinsurance companies, friendly societies and building societies and the superannuation industry.  APRA receives funds largely from the businesses and industries that are under its supervision. It ensures and enforces that the companies practice as per the standards stated and lives up to the promises made to the consumers.  It acts without bias and maintains high standards of professionalism and protects the financial health of the whole Australian community.

Investment options in Australia

APRA is a regulation authority that oversees the financial sector of Australia like banking system, credit unions, insurance agencies that undertake general and private health insurance, life insurance and reinsurance companies, friendly societies and most members of the pension industry. APRA is run from the funds that its receives from the industries under its surveillance. APRA was established on 1^st July 1998(APRA, 2017).

Australia’s corporate, markets and financial services regulator is ASIC.  ASIC is an independent governing Commonwealth Governing body which was set up that administers the

Australian Securities and Investments Commission’. It ensures that the financial markets of Australia are transparent and fair.  It is supported by investors and consumers that are confident.  It carries most of the work under the Corporation Act and contributes to the economic reputation of the Australian continent(ASIC, 2017).  Their main priorities are to regulate that the market is fair, orderly, transparent and promotes trust and confidence between the investor and consumers.  ASIC is the market regulator, consumer credit regulator, and financial service regulator.  It protects the consumers against misleading or deceptive conduct from all financial products or services.(ASIC, 2011; ASIC, 2017).

Answer 5

Bill and Mary must be provided a ‘health check’ of the house.  They must be provided with a ‘pre approval’ from the ABC bank.  They must be provided the comparison rate of the lenders which must include the interest rate and the fees and charges pertaining to the loan.  The couple must have the legal contract and they must ensure that everything in the house aligns with the contract so that they are not caught unawares.  Fred must provide all the necessary paperwork required and help them in the completion and submission of the home loan.

Fred Smith is the mortgage broker and his role here is to ensure that Bill and Mary have sufficient funds to repay their loans.  He must check their employment details and make all reasonable enquiries about their financial situation.  He must check their credit history and after satisfactory assessment, he must guide them in opting for the loan that best suits their budget.  Fred, as a mortgage broker must provide them product comparison and provide them details of the mortgage repayments and the upfront amount and ongoing fees.  His role must be as a mediator and the well-wisher of the couple.(PLAN Australia, 2017).

Generally, the mortgage brokers do not charge any brokerage from the client because they get their commission from the Bank.  In this case also, Fred gets an additional 1K for every client he brings to the bank.  If he charges some fees from the Bill and Mary then, this will give rise to conflicts.  Bill and Mary must do sufficient homework and study the credit and testimonials of Fred before approaching him.  The conflict of interests can arise if the agent receives benefits or discounts from the company that are recommended for the clients.  However, in this scenario, there is no conflict of interest but if it arises, the couple can lodge complaint against the REBA ACT and seek legal protection.(Government of Western Australia, 2015).

References

ACMA. (2008). Regulation of Commercial Broadcasting. Australian National Audit Office .

ACMA. (2015, June). Optimal conditions for effective self- and co-regulatory arrangements. Retrieved from Australian Communications and Media Authority: https://www.beta.acma.gov.au/~/media/Regulatory%20Frameworks%20and%20International%20Engagement/Report/PDF/Optimal%20conditions%20for%20effective%20self%20and%20co%20regulatory%20arrangements%202015%20edition.pdf

APRA. (2017). About APRA. Retrieved september 19, 2017, from Australian Prudential Regulation Authority: https://www.apra.gov.au/AboutAPRA/Pages/Default.aspx

ASIC. (2011). Review of general insurance claims handling and internal dispute resolution procedures. Australian Securities and Investments Commissions.

ASIC. (2017). Our role. Retrieved september 19, 2017, from https://asic.gov.au/about-asic/what-we-do/our-role/

ASIC. (2017). What we do? Retrieved september 19, 2017, from https://asic.gov.au/about-asic/what-we-do/

Beattie, D. (2016, July 11). Best Return On Investments – Shares, Bonds, Cash, Or Property? Retrieved september 19, 2017, from https://www.canstar.com.au/managed-funds/return-on-investments/

Castro, D. (2011, December). Benefits and Limitations of Industry Self-Regulation for Online Behavioral Advertising. Retrieved from Information Technology and Innovation Foundation: https://www.itif.org/files/2011-self-regulation-online-behavioral-advertising.pdf

Government of Western Australia. (2015, November 18). Conflicts of interest in real estate transactions – Real estate bulletin issue 101 (November 2015). Retrieved september 19, 2017, from https://www.commerce.wa.gov.au/publications/conflicts-interest-real-estate-transactions-real-estate-bulletin-issue-101-november

Kleinsteuber, H. J. (2004). Self-regulation, Co-regulation, State Regulation: The Internet between Regulation and Governance. In The Media Freedom Internet Cookbook (pp. 61-75). Organization for Security and Co-operation in Europe.

Morris, M., & Emily Cravigan, A. (2016, March 1). Data protection in Australia: overview. Retrieved SEPTEMBER 19, 2017, from Thomas Reuters: https://uk.practicallaw.thomsonreuters.com/8-519-8539?transitionType=Default&contextData=(sc.Default)&firstPage=true

Pedersen-McKinnon, N. (2012, July 24). The best place to invest $10,000 today. Retrieved september 19, 2017, from https://www.smh.com.au/money/the-best-place-to-invest-10000-today-20120623-20uuo.html

PLAN Australia. (2017). What Does A Mortgage Broker Do? Retrieved september 19, 2017, from Professional Lenders Association Network of Australia: https://www.planabettermortgage.com.au/why-use-a-mortgage-broker/what-does-a-mortgage-broker-do.htm.