Shockwaves from Australia’s Regulatory Gamble Could Spell Disaster for Businesses

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Businesses worldwide could face disaster as Australia takes a massive gamble with its risk and regulation policies!

In a recent discussion, Paul Newson, Principal at Senet and an expert on gambling regulation in Australia, discussed the regulatory process a gambling market must go through. However, he also cautioned against the potential danger of over-correcting.

Financial Services Royal Commission report into banking, superannuation, gambling

The Financial Services Royal Commission investigation, which focused on misconduct in the banking, superannuation, and financial services industry, concluded in February 2019. It revealed widespread toxic culture and pervasive misconduct within the sector.

“The Royal Commission has highlighted the importance of thorough risk and regulation assessment,” said Newson.

“The problem is, when it comes to gambling regulation in Australia, the pendulum swung too far in the other direction. We are now considering introducing a process that may be even more onerous than initially required. This could create an environment of over-regulation that will put businesses and consumers at risk.”

While the Australian Securities & Investments Commission (ASIC) faced criticism, Commissioner Hayne determined that the primary responsibility for the uncovered misconduct and resulting harm rested with the entities and their boards and management.

It is not entirely unreasonable that the pendulum had swung, leading the corporate regulator to adopt its ‘Why Not Litigate?’ approach toward enforcement in late 2018, coinciding with the conclusion of the Royal Commission.

Gambling industry faces tough choices as it seeks to recover from the crisis

Fast forward to 2021, and the ‘Why Not Litigate?’ approach has become a distant echo, replaced by a more pragmatic strategy and a clear commitment to promoting economic recovery. This entails enhancing and streamlining regulations, fostering innovation, and targeting regulatory and enforcement actions where the most significant harm lies.

The importance of integrity in financial services, access to banking facilities and credit for businesses and consumers is evident. However, the gambling sector lacks the same advocates and cannot quickly achieve the redemption attained by banks adeptly navigating the politics and support during the pandemic.

“The problem of over-correction involves heavy-handed policies and unrealistic expectations,” says Newson. “The challenge to maintain the necessary balance in regulation while still allowing innovation and progress is complex.”

Establishing robust policy frameworks, regulatory leadership, and expert industry oversight, supported by political backing, are essential for ensuring the industry’s integrity and fostering public confidence.

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