7.4 — Fundamental norms

As far as possible, legislation governing financial services entities should identify expressly what fundamental norms of behaviour are being pursued when particular and detailed rules are made about a particular subject matter.

Government Response

The Government agrees to simplify the financial services law to eliminate exceptions and qualifications to the law, where possible. The Government also agrees to identify the norms of behaviour and principles that underpin legislation as part of the legislative simplification process.

The Royal Commission has noted that overprescription and excessive detail can shift responsibility for behaviour away from regulated entities and encourage them to undertake a ‘boxticking’ approach to compliance, rather than ensuring they comply with the fundamental norms of behaviour that should guide their conduct. A clearer focus on those fundamental norms in the primary legislation and subordinate instruments will improve the regulatory architecture and ensure that the law’s intent is met.