by Dr. Andrew D. Schmulow
The International Review of Financial Consumers, Vol. 5, 2020, pp: 1-11.
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by Dr. Andrew D. Schmulow, Dore Virginia, Reardon Jacob & Hanna William
Law and Financial Markets Review, Vol. 14, no. 4, 2020, pp: 1-22.
This paper traces the establishment of the new Australian Financial Complaints Authority (AFCA). It places this development within the wider context of what we argue is an important new adjunct to the Australian financial regulatory architecture, and by implication therefore, the international significance of these reforms to countries that have adopted the Australian “Twin Peaks” model. By reference to the Ramsay Review and other sources, we include analysis of AFCA’s forerunners, and their failures; and we include comparative analysis from other jurisdictions. We provide analysis of AFCA’s strengths and potential weaknesses, and some initial data on AFCA outcomes. Finally, we provide concluding remarks on these reforms.
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by Dr. Andrew D. Schmulow
Australian Journal of Corporate Law, Vol. 16, no. 1, 2003, pp: 38-49.
In the wake of the collapse of the insurer, HIH, this article proposes for discussion an alternative method of enforcing prudential regulations, especially in light of the admission by APRA before the HIH Royal Commission, and the commission’s own findings, which confirmed that APRA failed to adequately enforce existing prudential regulations — regulations which are designed to prevent fragility and ultimately collapses in the insurance and banking sectors. This article aims to investigate the feasibility of policy-only liability insurance for direct insurers as a market-based mechanism to replace prudential regulation in the wake of the failure of APRA to adequately regulate HIH. The hope of this writer is to encourage debate on alternative methods of prudential regulation and regulatory enforcement.
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by Dr. Andrew D. Schmulow
Waikato Law Review, Vol. 16, no. 1, 2008, pp: 252-263.
This paper will argue that even recent history is littered with examples of failures by the financial regulators to prevent bank and insurer failures in the UK, the US, Australia and elsewhere. This paper argues that regulators are inherently incapable of performing the task. The theoretical basis for which is investigated below. Evidence will be drawn from the collapse of HIH and the role of the Australian Prudential Regulator (APRA) in that collapse.
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by Dr. Andrew D. Schmulow and Dr. Andrew J. Godwin
South African Law Journal, Vol. 132, no. 4, 2015, pp: 756-768.
This article discusses the Financial Sector Regulation Bill in South Africa, and the manner in which it emulates the Australian Twin Peaks regulatory model. South Africa is the most recent country to adopt this model, and the article examines these reforms by analysing the implications of the jurisdictional location of the Prudential Regulator; how best to achieve effective co-ordination between the regulators; and what substantive powers and functions should be ceded to an interagency co-operative body.
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by Dr. Andrew D. Schmulow
Competition and Consumer Law Journal, Vol. 24, no. 3, 2016.
This article provides a statement and an analysis of South Africa’s statutory provisions aimed at curbing reckless lending, and preventing predatory lending, to financial consumers. The focus of the article is on the statutory mechanisms for combatting reckless and predatory lending, including a critique of the success or otherwise of the implementation of the relevant legislation. The article aims to provide a comparative analysis of what is, overall, an innovative and effective regime, the aim of which is to protect vulnerable financial consumers from reckless and predatory lending practices. As such, it is hoped, that the article will provide useful techniques for the protection of borrowers in other common law jurisdictions, such as Australia, Canada and the United States, or indeed wherever vulnerable consumers of finance are liable to be exploited.
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Also published in SSRN Journal.
by Dr. Andrew D. Schmulow
African Journal of International and Comparative Law, Vol. 25, no. 3, 2017, pp: 393-417.
This article examines the implementation of the Twin Peaks model of financial system regulation in South Africa, the purpose of which is to create a financial system stability regulator, and a financial system consumer protection and market conduct regulator. It examines the historical development of Twin Peaks and its regulatory enforcement principles. It then analyses the similarities and differences between Twin Peaks in Australia (upon which the South African reforms are based) and South Africa. Finally the article provides concluding observations.
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Also published in SSRN Journal and as a working paper in “University of Western Australia – Faculty of Law Research Paper Series“.
by Dr. Andrew D. Schmulow
Law and Financial Markets Review, Vol. 11, no. 4, 2018, pp: 163-173.
This article examines retail market regulatory reforms currently underway, as part of the implementation of a Twin Peaks regulatory model in South Africa. A brief account is provided of the history of these reforms, followed by an analysis of the normative goals put in place for a new market conduct and consumer protection regime; and the developmental needs that inform those goals. Thereafter the article explores the inter-relationship between the existing credit regulator and the soon to be established Financial Sector Conduct Authority. An analysis is then provided of accountability mechanisms, as well as failures exhibited by those mechanisms in the UK and Australia. Finally an argument is made for a “regulator for the regulators”, in order to address past regulatory failures.
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Also published in SSRN Journal and as a working paper in “University of Western Australia – Faculty of Law Research Paper Series“.
by Dr. Andrew D. Schmulow
International Review of Financial Consumers, Vol. 3, no. 1, 2018, pp: 1-14.
Australia is in the midst of a financial regulatory crisis. Evidence of malpractice, fraud, criminality, contempt for the law, and the abuse of consumers on an industrial scale, all while Australia’s Twin Peaks regulators looked on, has come as a shocking surprise. The implications stretch well beyond Australia: they are relevant wherever the Australian ’Twin Peaks’ model has been adopted or is under consideration. This article argues that the Twin Peaks model must be analysed from the perspective of regulatory design, as well as implementation. The design – the architecture of Twin Peaks – remains optimal. However the implementation – the plumbing – requires urgent reforms. Drawing on the work of notable international scholars, this article proposes a new accountability framework for the two, peak regulators, in order to enhance their efficacy. In the process of rescuing Twin Peaks from its current inadequate plumbing, consumers may expect to enjoy levels of protection commensurate with those of a developed economy possessed of rule of law.
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by Dr. Andrew D. Schmulow, Dr. Karen Fairweather and Prof. John Tarrant
Law and Financial Markets Review, Vol. 12, no. 4, 2018, pp: 193-202.
In November 2017 the Federal government established a Royal Commission into Australia’s financial services industry that has become widely known as the Banking Royal Commission. The Commission has, during its hearings, and in its recent Interim Report, exposed serious misconduct and poor regulation in Australia’s financial services industry. The authors argue that the recommendation of the 2014 Financial System Inquiry that there be an Assessment Board to provide continuous oversight of the financial regulators, APRA and ASIC, is an effective solution to the regulatory failures exposed by the Banking Royal Commission. The benefits to Australia of the establishment of an Assessment Board are clear, and include enhanced accountability, improvements in the regulator’s culture, prevention of regulatory capture, and enhanced capacity to prevent financial crises. The introduction of an Assessment Board in Australia would serve as a timely and highly effective adjunct to the current Australian Twin Peaks financial regulatory architecture comprising APRA and ASIC.
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Also published in SSRN Journal.