Flexibility in approach is an essential element for regulators in the financial service sector, ACCC Acting Chairman, Mr Allan Asher, told a financial planning association lunch in Sydney yesterday.

"Attempting to draft legislation that accurately reflects the state of an industry at any given time is difficult enough," Mr Asher said, "To try and anticipate new developments, and their effects on the type of goods and services that will be offered, is virtually impossible.

"Industry specific legislation, with necessarily limited definitions, could be redundant in a very short space of time, or worse, could act as an impediment to the growth of the industry by making arbitrary and technically outdated distinctions between market participants."

Mr Asher said there was a need to develop 'responsive' regulation, whose essence was flexibility.

"No single solution, or outcome, ought to be mandated for every particular instance of particular conduct, To the greatest extent possible, regulatory policy should mobilise the resources and self-interest of the regulated to achieve a mutually beneficial result."

Mr Asher also called for retention section 52 of the TPA, dealing with misleading or deceptive conduct in relation to fundraising, takeovers and other dealings in securities, which the Corporations Law Simplification Task Force has argued should be replaced by provisions of the Corporations Law.

"Regulation under the Corporations Law instead of section 52 would impose a lesser duty of care on corporations preparing prospectuses and other information documents for investors.

"A corporation could excuse itself from providing clients with accurate information on the basis that it took reasonable care and exercised due diligence.

"Put simply, the proposal would subject some sectors of the corporate fundraising community to a more lenient regime than all other sectors, despite the magnitude of the sums involved and the inequality of access to expertise between the corporate fundraising community and, for example, 'mum and dad' investors."

Any exemptions to the TPA would "open the floodgates" so that other industries may also seek exemption and would have detriment effects for both consumer confidence and for the operation of efficient capital markets at a time when there is an increasing number of private, financially unsophisticated investors needing TPA protection.