A senior Australian financial services regulator has released a consultation paper inviting industry feedback on the design and operation of its consultation process. The paper, entitled “Review Of The Consultation Framework: Discussion Paper”, sets out 14 proposals intended to enhance the effectiveness of regulator-industry engagement. The deadline for submissions is 90 days. Industry has indicated it will require more time.
The paper describes consultation as “a foundational mechanism of contemporary regulatory practice”, and notes that an effective consultation framework is a precondition for successful policy development. The framework is currently being consulted on. The current framework was itself the product of a previous consultation, completed in 2019. The 2019 framework replaced an earlier framework. The earlier framework had also been consulted on.
The regulator confirmed that the review was a routine exercise, undertaken every five to seven years, to ensure the consultation process “continues to meet the expectations of stakeholders”. Stakeholders’ expectations are summarised in Section 3 of the paper. The summary is based on a previous consultation about stakeholder expectations.
The Proposals
The paper sets out 14 proposed enhancements to the consultation framework. Industry has been invited to comment on each.
Proposal 1 introduces a structured pre-consultation engagement period. The pre-consultation period would precede the formal consultation period. The formal consultation period would precede the post-consultation review. The post-consultation review would precede the implementation phase. The implementation phase would precede the post-implementation review. The post-implementation review would inform the next consultation. The framework is described as cyclical.
Proposal 5 introduces a new role: the Consultation Coordinator. The Consultation Coordinator would coordinate consultations across the regulator’s functional teams. The Consultation Coordinator would also be responsible for issuing consultation papers, tracking submissions, and synthesising responses. The Consultation Coordinator would not be involved in policy development. The role is described in the paper as “meaningful but distinct”.
Proposal 11 introduces a feedback mechanism through which industry stakeholders could rate the quality of consultations. The feedback would be captured at the close of each consultation, on a five-point scale. The feedback would be used to inform improvements to future consultations. The feedback collected on the current consultation is included in the next consultation, which would itself be subject to feedback. The feedback loop is described in the paper as virtuous.
“We are committed to engaging openly and meaningfully with industry,” the regulator said in remarks accompanying the release. “Feedback on this paper will inform the development of an enhanced consultation framework, which will then be consulted on in further detail before being finalised.” The further consultation is expected to take 12 months.
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An industry body representing the institutions affected confirmed it had “noted the release” and was “assessing the implications for member firms”. The industry body said it was particularly interested in Proposal 7, which seeks views on the appropriate length of the consultation period. The industry body has indicated its preferred length is longer than the current period. It has not specified by how much.
A senior compliance professional at one of the participating institutions said the firm welcomed the regulator’s engagement, and would prepare a detailed response. Preparing a detailed response would require legal review. Legal review would require an internal working group. The internal working group would meet weekly. The internal working group would prepare a discussion document. The discussion document would form the basis of the firm’s submission. The firm’s submission would be due in 90 days.
The industry body has formally requested an extension to the submission deadline. The request was submitted via the existing consultation channel. The existing consultation channel is the subject of the current consultation. The extension request will be considered as part of Proposal 9, which deals with the appropriate handling of submission deadlines. The extension request is itself a submission. It will be reviewed in the order in which it was received.
The Wider Pattern
This is not the first time the regulator has consulted on its consultation framework. A consultation in 2017 introduced the current submission template. A consultation in 2014 introduced the requirement for a regulatory impact assessment. A consultation in 2010 introduced the consultation paper itself. Each consultation produced an enhancement. Each enhancement was followed by a further enhancement.
A consultant familiar with the regulator’s engagement process described the pattern as “entirely consistent with global practice”. The consultant noted that comparable regulators in the United Kingdom, the European Union, and Singapore had each undertaken similar reviews of their consultation frameworks within the last three years. “The direction of travel is clear,” the consultant said. “It is towards more consultation.”
The current consultation closes on the date specified in Section 12. Section 12 refers readers to Appendix B. Appendix B contains the timeline. The timeline is provisional, pending the outcome of the consultation on the appropriate length of the consultation period. The regulator has indicated it will issue further guidance once the appropriate length has been determined. The guidance will be subject to consultation.
