Senator Nick Sherry, Minister for Superannuation and Corporate Law, today confirmed that as part of the agreed Commonwealth takeover of margin lending regulation there will be a significant increase in consumer protection through simpler, more effective disclosure.
"As part of the landmark agreement on the national regulation of financial services reached during 2008, by the middle of next year, margin lending will for the first time be properly regulated in Australia."
"Margin lending will be added to the Corporations Act as a financial product – this means for the first time it will have uniform disclosure requirements that will dramatically improve protections for consumers."
"I can also confirm today that the Government's Financial Services Working Group has been immediately tasked with ensuring that this disclosure will be simple, clear and easy to read, unlike the often Latin-like documents we've seen in the past," said Minister Sherry.
The Rudd Government placed the regulation of margin lending on the Council of Australian Governments' (COAG) agenda in March 2008, followed by the release of a Financial Services Green Paper in June 2008 setting out possible reforms.
The Rudd Government then secured the final agreement of the States and Territories at the July COAG meeting and in November 2008 released the final $71 million package to nationally regulate consumer credit, including margin lending.
"For the first time, there will be single, standard regulation of financial services, bringing regulation into the 21st Century.
"The Rudd Government moved on this issue within months of coming to office. This was after a long lost decade in which the previous Government did absolutely nothing to make sure Australian investors were being properly informed about margin lending products."
"We've taken decisive action to look afresh at how margin loans are sold, who they're being sold to and how people are informed about the risks they might face."
"Conservatively geared margin lending may have a role in a balanced investment strategy but people need to fully understand what they are entering into. The new, clear disclosure regime will deliver that for Australian investors," said Minister Sherry.