Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)3 Financial impact statement
3.1 The FSR Bill will reduce compliance costs for industry through the introduction of consistent product disclosure obligations across all financial products regulated by the Bill. However, industry is likely to incur some costs in the initial stages associated with preparing the new disclosure documents required under the new regime. Costs will be limited by the fact that the new disclosure regime is broadly in line with existing requirements, and through transitional provisions which will permit a gradual adaptation to the new requirements.
3.2 The Bill will also reduce compliance costs in respect of licensing, conduct and disclosure requirements imposed on financial service providers, who will need only to satisfy the requirements of the Bill, rather than varying requirements imposed by a number of Acts. Industry may incur costs in satisfying the new licensing arrangements and in bringing their conduct and disclosure practices in line with the new regime, although the new requirements largely build on existing requirements. Again, transitional provisions should minimise costs to industry.
3.3 The Bill simplifies licensing procedures for financial markets and clearing and settlement facilities, thereby reducing compliance costs in this area also. These participants in the financial sector may incur minor additional costs in providing information required under the new fit and proper person test.
3.4 The Bill will impose some costs on takeover targets and bidders affected by the telephone monitoring provisions, associated with staff training, provision of equipment, and information handling costs.
3.5 ASIC, as the regulatory body responsible for administering the new provisions, will incur some additional costs in the transition to the new regime.