The purpose of this paper is to critically analyse various aspects of Australian Financial Services Regulation in terms of Llewellyn’s Theory of Financial Services Regulation and offer suggestions for the improvement of FSR based on the analysis. A discussion based approach is used to conduct this analysis. It is observed that the FSR Act, 2001 of Australia does not cover credit products thereby leaving an important segment of the market outside the purview of the Act. The policies developed by Australian Securities and Investment Commission (ASIC) on FSR Act relies on Industry self regulation as mechanism of creating trust and confidence in Financial Service Industry. This approach has limitations in achieving its objective. The Australian regulators face considerable challenges in generating confidence and trust although ASIC has put in place disclosure regime and client protection provisions that help in providing relief to the consumers. This paper provides a contribution to the literature on Financial Services Regulation as it examines the development of regulation in terms of a theoretical framework to determine its adequacy and fairness.