The Treasury wants parliament to give up large swathes of its lawmaking power in favour of a handful of unelected appointees. Mocking constitutional requirements of the separation of powers and the rule of law , the draft Conduct of Financial Institutions Bill delegates colossal legislative power to the “executive committee” of the Financial Sector Conduct Authority . This committee will consist of three to five “commissioners”, all to be appointed by the finance minister.
Delegation may be legitimate for complex environments such as financial or energy markets where regulatory flexibility could be required, but even there caution is paramount. This bill is so profoundly flawed that one wonders whether it is possible for a revision to improve on it. Licensees would have to debar their representatives who fail to comply with prescribed requirements from rendering financial services. Licensees would be prohibited from appointing previously-debarred representatives who do not comply with the committee’s prescribed requirements. The committee would be able to prescribe how licensees must disclose to customers the effects of retail contracts, failing which contracts will be deemed unfair and unreasonable.