Financial Services in Focus – Issue 104

ASIC proposes to remake relief instrument for managed investment product consideration

On 5 August, ASIC announced it is seeking feedback on a proposal to remake ASIC Corporations (Managed Investment Product Consideration) Instrument 2015/847,which is due to sunset on 1 October 2025, for a further period of five years.

Instrument 2015/847 modifies the requirements relating to the pricing of interests in managed investment schemes (other than time share schemes) registered before 1 October 2013. 

ASIC has assessed that this instrument is operating effectively and efficiently and continues to form a necessary and useful part of the legislative framework, with only minor changes proposed, including:

• simplifying the requirements to document exercises of discretion affecting the pricing of interests;

• reducing the level of prescription in those documentation provisions; and 

• ensuring the instrument is in line with ASIC’s current drafting style

Consultation closed on 29 August 2025.

APRA releases 2025 superannuation performance test results and product insights

On 29 August, APRA released the results of the 2025 superannuation performance test, which assesses long-term performance to improve transparency and outcomes for fund members. In 2025, APRA assessed 563 superannuation products:

• 52 MySuper products, all of which passed the test (none failed in 2024);

• 374 non-platform trustee-directed products, all of which passed the test (none failed in 2024); and

• 137 platform trustee-directed products, of which seven failed the test (37 failed in 2024).

The Performance Test Dashboard, Comprehensive Product Performance Package (CPPP) Dashboard, CPPP Insights paper and associated data files are available on the APRA website. [HW1] 

APRA publishes updates to FAQs on Superannuation data reporting

On 15 August, APRA released 32 new frequently asked questions (FAQs) to support the Superannuation data reporting framework. The updated FAQs are designed to assist registrable superannuation entity (RSE) licensees in meeting reporting requirements by clarifying expectations and providing practical guidance.

ASIC to review superannuation investment requirements

On 13 August, ASIC announced it has commenced a targeted review of the requirement to disclose stamp duty payments in ASIC Regulatory Guide 97: Disclosing fees and costs in PDSs and periodic statements (RG 97). This comes following concerns that the disclosure requirements negatively impact performance test results and discourage investment in property by superannuation funds with the aim of the review to encourage investment in property by Australia’s superannuation funds. The review will also consider whether class order relief should be given to bring consistency to how internally and externally managed private credit arrangements are disclosed.

ASIC Chair Mr Joe Longo stated that ‘[ASIC] want to ensure red tape isn’t unnecessarily holding back investments’ and ‘if the review finds appropriate changes will deliver benefits without undermining disclosures, then ASIC will act’. 

The review will be led by ASIC and will include industry representatives and Treasury. The review will report by 30 November.

APRA releases notes on Superannuation CEO Roundtable

On 11 August, APRA released its notes on the most recent Superannuation CEO Roundtable held on 10 July 2025, which focused on recent cyber incidents affecting several superannuation entities. During the roundtable, APRA highlighted the need for regulated entities to uplift security measures to safeguard superannuation members and the broader financial system from cyber incidents. APRA also took the opportunity to remind industry about its expectations around robust authentication controls.

Treasury opens consultation on best practice principles for superannuation retirement income solutions

On 7 August, Treasury released for consultation proposed best practice principles for superannuation retirement income solutions. The principles are designed to guide superannuation funds and trustees in developing and offering high quality retirement income solutions to their members and are intended to complement existing trustee obligations. 

The consultation paper seeks views on best practices across three key areas:

• understanding the membership base;

• increasing access to retirement products and features; and

• communicating with members effectively.

Consultation closes on 18 September 2025.

ASIC focuses on improvements to direct sales practices in life insurance

On 19 August, ASIC released a letter to life companies following its review of the direct sale of life insurance policies by the life insurance industry. In the letter, ASIC calls for an improvement to life companies’ product, sales, and complaints handling practices in relation to direct sales to customers.

In response to the review, ASIC identified four key recommendations to improve compliance and benefit consumers: 

• strengthen product design with better use of customer feedback by testing and incorporating complaints, claims, and cancellation data into design processes, and improving product monitoring; 

• improve sales and pay practices by enhancing quality assurance processes, and linking sales staff pay to compliance and customer satisfaction measures. Linking performance to sales volume alone can create incentives for conduct contrary to the interests of consumers; 

• apply consistent quality standards to retention calls and streamline cancellation processes, ensuring clear criteria for identifying inappropriate pressure tactics, the proper oversight of retention activities, and objection-handling practices that respect customer decisions; and 

• treat complaints as valuable business intelligence, sharing complaint information across relevant business units to enable systematic improvements.

ASIC further noted that the steps life insurers take in responding to the matters identified in the letter will inform ASIC’s response where it identifies conduct of concern, commences investigations or takes enforcement action.

ASIC remakes incidental retail cover legislative instrument

On 13 August, ASIC announced that ASIC Corporations (Incidental Retail Cover) Instrument 2022/716, which was due to expire on 16 August 2025, has been remade and extended for another five years. 

ASIC originally granted the relief to reduce regulatory burden and provide certainty for industry that the retail client obligations do not apply to business insurance products which incidentally include retail cover, preventing retail client compliance costs from being incurred and passed on to businesses. 

Treasury consults on Compensation Scheme of Last Resort levy framework

On 1 August, Treasury announced it is consulting on the statutory options available to deal with the Compensation Scheme of Last Resort (CSLR) 2025-26 revised claims, fees and costs estimate.

A copy of the consultation paper can be viewed online. 

Consultation closed on 29 August 2025.

ASIC aims to enhance competition and innovation in Australia’s evolving capital markets

On 6 August, ASIC announced it is taking significant steps to enhance competition and innovation in Australia’s evolving capital markets and attract more foreign capital to Australia.

ASIC highlights a number of key milestones it is working towards, including:

• it is in the final stages of considering a listing market application from Cboe Australia, a subsidiary of Cboe Global Markets (Cboe). Cboe Australia currently provides trading in ASX listed securities and admits exchange traded products through its own market;

• it is also expanding the approved foreign markets to include Cboe’s US and Canadian exchanges, along with the Canadian Securities Exchange; and 

• is actively exploring measures to streamline dual listings of foreign companies in Australia.

These expansions will enable Australian investors to participate in certain transactions in these markets, further integrating Australia into the global financial system, whilst promoting Australia as an attractive destination for international capital. 

AUSTRAC releases final version of the Anti-Money Laundering and Counter-Terrorism Financing Rules

On 29 August, AUSTRAC released the final version of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025(Cth) (Rules), which take effect from 31 March 2026 for existing reporting entities, and 1 July 2026 for tranche 2 entities. The key changes to the Rules include amendments to the definition of 'lead entity', changes to customer due diligence procedures, the introduction of the requirement to assess agreements or arrangements to rely on KYC information, and transitional relief regarding suspicious matter reports, threshold transaction reports and keep open notices.

AUSTRAC has also released a renumbering table which highlights whether each provision contained in the second exposure draft of the Rules has been amended, remains unchanged, or is new.

For further information, please refer to our alert on the impacts of the final version of the Rules.

APRA and ASIC announce changes following CFR Report on supporting small and medium-sized banks

On 7 August, APRA announced changes to its banking framework to increase proportionality and reduce regulatory burden following the Council of Financial Regulators’ (CFR) review into small and medium-sized banks.

APRA’s report detailing the review (CFR Report) was released in July and concluded that the while the regulatory regime is broadly fit-for purpose, there were areas for improvement to enhance competition in the market. The CFR Report also contained a package of proposed recommendations to reduce regulatory costs for small and medium-sized banks and to improve competitiveness with larger banks. 

In response to the proposed recommendations, APRA has said it will:

• formalise a three-tiered approach to proportionality in the regulatory framework for banking to broadly align with large banks, medium banks (other banks that are Significant Financial Institutions) and small banks;
• streamline and clarify the accreditation process for banks using the internal-ratings based approach to calculate risk-weighted assets;
• improve communication to banks regarding APRA’s decisions on minimum capital requirements under Pillar 2 of the Basel framework, including the risks that must be addressed for capital adjustments to be removed or lowered; and
• amend the bank licensing framework with the aim of making its expectations more transparent and the process more efficient.

Similarly, ASIC announced its intention to act upon relevant recommendations contained in the CFR Report, which include to:

• reduce the frequency of internal dispute resolution (IDR) data reporting for small banks (from 6 months to 12 months); and
• adopt ongoing processes to review regulatory reporting requirements for small and medium-sized banks, to ensure fitness for purpose.

ASIC aims to action the reforms to reporting of IDR data as soon as possible and will shortly contact small banks to implement the recommended reduction in reporting frequency, further advising that it will take a no-action position for small banks until the technical and system changes are formalised in approximately 2027.

ASIC notes that the implementation of these proposals means there will be an immediate reduction in reporting burden for small banks from the next IDR data submission window in January-February 2026.

ATO expands data-matching to combat financial fraud

On 12 August, the ATO announced the expansion of its data-matching capabilities through the Australian Financial Crimes Exchange (AFCX) data-matching program to strengthen protections against identity crime and fraud.

The new AFCX data-matching program will enable the ATO to:

• match AFCX data with ATO records and other data holdings to identify bank accounts and IP addresses linked to fraudulent activity;

• receive over half a million records annually of suspected money mule bank accounts and malicious IP addresses;

• detect and prevent fraudulent registrations, lodgements and refunds; and

• take action against individuals involved in money laundering schemes.

ASIC publishes 2025-26 Corporate Plan 

On 27 August, ASIC released its 2025-26 Corporate Plan, detailing the intention to boost to its investigation and enforcement activity.

ASIC’s key strategic priorities in its long-term 2025-29 plan include:

• improving consumer outcomes with a particular focus on credit and financial hardship, dispute resolution, scams and insurance;

• strengthening market disclosure and professional conduct with a particular focus on financial and climate reporting, auditors and director conduct;

• supporting better retirement outcomes and member services with particular focus on superannuation member services, retirement outcomes, and the exploitation of superannuation savings;

• strengthening operational, digital and data resilience and safety with a particular focus on the use of AI and cyber resilience; and

• driving integrity and transparency across markets, with a particular focus on digital asset reforms and the changing risks in private markets.

ASIC focuses on consumer and retail investor protection off the back of new complaints data

On 21 August, ASIC issued a media release after new data revealed a sharp rise in the number of retail investor complaints, with ASIC receiving 7561 reports of misconduct from 1 January 2025 to 30 June 2025, raising 11060 issues. Of this, 5909 of the reported issues fell into the ‘financial services and retail investor’ category – this category includes credit issues, license obligations, and other conduct related to advice, insurance, and misleading and deceptive or unconscionable behaviour.

ASIC issues summary of enforcement outcomes

On 21 August, ASIC released its latest six-monthly Enforcement and Regulatory update, which highlighted its high impact initiatives for the period 1 January 2025 to 30 June 2025.

APRA publishes 2025-26 Corporate Plan

On 21 August, APRA released its 2025-26 Corporate Plan aimed at preserving the safety and stability of banks, insurers, superannuation trustees and the broader financial system.

Among APRA’s top strategic priorities in its corporate plan are:

• strengthening cyber resilience across regulated industries, with a focus on monitoring for emerging risks specifically associated with the adoption of artificial intelligence and in the context of geopolitical tensions;

• assessing the degree to which regulated entities are complying with APRA’s new Prudential Standard CPS 230 Operational Risk Management;

• updating APRA’s prudential standards for governance;

• publishing the results of APRA’s inaugural System Stress Test, designed to evaluate risks arising from interconnectedness between the banking and superannuation sectors;

• intensifying scrutiny of superannuation fund expenditure and reviewing the investment governance and member outcomes of major platform providers; and

• releasing the results of APRA’s Climate Vulnerability Assessment for the general insurance sector.

The corporate plan contains a heightened focus on ensuring APRA strikes the right balance between financial safety and considerations such as competition, efficiency and productivity. Initiatives include consulting on the formalisation of a third tier of proportionality in the prudential framework for banking, promoting access to more affordable reinsurance for general insurers, and removing duplicative or unnecessary regulatory requirements.

The 2025-26 Corporate Plan is available on the APRA website.

AFCA releases updated financial difficulty EDR response guide 

On 14 August, AFCA published an updated version of its Financial Difficulty External Dispute Resolution (EDR) Response Guide, providing clearer expectations for how financial firms should respond to complaints involving financial hardship.

The enhanced guide builds on the original by outlining more detailed requirements for documenting and explaining decisions, responding to hardship notices, and demonstrating compliance with regulatory obligations. It draws on the National Credit Code, relevant industry Codes of Practice, and AFCA’s fairness principles.

New content includes guidance on addressing customer vulnerability and a more comprehensive list of supporting information to ensure responses are thorough, transparent, and aligned with AFCA’s requirements. These updates aim to help financial firms support fair outcomes and enable AFCA to resolve complaints more efficiently.

You can access the updated guide on the AFCA website. 

ASIC consults on proposed changes to Regulatory Guide 181

On 30 July, ASIC announced it is consulting on proposed updates to Regulatory Guide 181: Licensing: Managing conflicts of interest. The updated guidance sets out how AFS licensees should comply with their conflicts management obligations and explains:

• how the law applies, including its scope and interaction with other related obligations;

• the types of conflicts AFS licensees need to identify and manage to meet their obligation;

• the need to have robust and tailored arrangements that are adequate to manage conflicts; and

• how licensees can effectively manage conflicts.

Consultation closed on 5 September 2025.