1. The History of Retail Investor Protection

Protection of retail investors over the last decade in Australia has been primarily governed by the provisions of the Corporations Act 2001 and the Financial Services Reform Act 2001, and the regulations made by the Australian Securities and Investments Commission (ASIC). ASIC was allocated responsibility for consumer protection with regards to financial services and products when a restructuring of regulatory agencies occurred in 1998 following the Wallis Report. That restructuring involved the creation of APRA as the prudential regulator of ADIs, insurance and superannuation entities, and transferred from the Australian Competition and Consumer Commission to ASIC consumer protection responsibilities in the finance sector. ASIC also was given responsibility for promotion of financial literacy in July 20081 – which had previously been the responsibility of a Financial Literacy Foundation established by the Government. Also in 2008, a single Financial Services Ombudsman was created out of a number of separate financial sector Ombudsman schemes. The Corporations Act 2001 introduced definitions of financial products and financial services and required that companies and individuals engaged in creating financial products and providing financial services are required to hold an Australian Financial Services Licence (AFSL). These requirements covered provision of financial investment and planning advice, but did not capture consumer credit and mortgage activities, which were regulated under State Government Laws under the Uniform Credit Code. Obligations of an AFSL include: “ · providing relevant financial services efficiently, honestly and fairly; 1 ASIC’s consumer website FIDO gives details of activities