Financial Services Snapshots

Licensing

ASIC proposes further relief for licensees under the reportable situations regime

On 18 February 2025, ASIC announced it is proposing additional relief to further assist Australian financial services and credit licensees comply with the reportable situations regime.

ASIC invites feedback on their proposal to give relief from reporting certain breaches of the misleading and deceptive conduct provisions, and certain contraventions of civil penalties where:

• the breach has been rectified within 30 days from when it first occurred (this includes paying any necessary remediation);
• the number of impacted consumers is not more than five;
• the total financial loss or damage to all impacted consumers resulting from the breach is not more than $500 (including where the loss has been remediated); and
• the breach is not a contravention of the client money reporting rules, and clearing and settlement rules.

See: Media Release; CS 16 Reportable situations – additional relief (CS 16)

Consumer Credit

ASIC invites feedback on buy now pay later regulatory guidance

On 7 February 2025, ASIC announced a consultation on new regulatory guidance for the buy now pay later (BNPL) industry.

From June 2025, BNPL products will be subject to new legislation. Under the new laws, BNPL providers will need to hold a credit licence and comply with obligations under the National Consumer Credit Protection Act 2009 (National Consumer Credit Act) from June 2025.

Where a BNPL contract meets the definition of a low cost credit contract, specific obligations will apply.

ASIC released draft Regulatory Guide 000 Low cost credit contracts (Draft RG 000) together with Consultation Paper 382 Low cost credit contracts (CP 382) for industry and relevant stakeholders to provide feedback on.

The draft RG 000 is intended to help providers of low cost credit contracts to understand their key obligations, including how to comply with the modified responsible lending obligations and requirements when making materials available electronically.

See: Media Release; Low cost credit contracts (Draft RG 000); Consultation Paper 382, Low cost credit contracts (CP 382)

Financial Advice

ASIC Financial advice update - February 2025

On 12 February 2025, ASIC released its Financial advice update – a round-up of regulatory developments and issues affecting financial advice and covering all areas of financial advice regulation and includes a broad range of content relevant to Australian financial services licensees who are advice licensees and financial advisers.

The topics of this update are:

• professional standards and assessment of qualifications
• experienced provider pathway
• review of compliance with professional standards and professional year programs
• first internal dispute resolution data report and findings
• first report on the adoption of artificial intelligence by licensees
• summary of recent ASIC enforcement matters
• update from the Financial Services and Credit Panel
• review of advice on establishing a self-managed super fund
• update on reportable situations regime
• updates to the ASIC newsroom
• recent ASIC news on financial advice

See: Media Release

Compensation Scheme of Last Resort post-implementation review

On 31 January 2025, the Assistant Treasurer announced a post implementation review of the Compensation Scheme of Last Resort (CSLR). The purpose of the review is to ensure that the CSLR remains sustainable for consumers and the industry into the future.

The CSLR provides compensation for victims of financial services misconduct as a last resort to eligible consumers who have an unpaid determination from AFCA relating to a financial product or service within the scope of the scheme.

The CSLR commenced operations on 2 April 2024.

See: Media Release; Terms of reference

Banking

APRA rescinds information paper on cloud outsourcing and ceases ad hoc credit reporting collection

On 19 February 2025, APRA confirmed two further steps to simplify the prudential framework.

First, APRA rescinded the 2018 Information Paper “Outsourcing Involving Cloud Computing Services” in light of Prudential Standard CPS 230 Operational Risk Management (CPS 230).

CPS 230 comes into effect 1 July 2025 (replacing existing standards 231 Outsourcing and 232 Business Continuity Management) and includes formal supervisory coverage for entities with cloud service provider arrangements.

APRA states that based on industry feedback, the withdrawal of the information paper aims to reduce regulatory burden and improve clarity about the expected approach for material service provider arrangements. APRA regulated entities will be expected to comply with CPS 230 requirements when using cloud services to appropriately manage associated risks and ensure operational resilience.

APRA has also ceased the collection of “ARF 923.0 Covid-19 Capital and Credit” with the last submission being the period ending 31 January 2025. This collection was initiated in 2020 as part of measures to help banks support customers impacted by COVID-19. The decision was part of APRA’s regular review of its ad hoc data collection, and follows a number of cessations in 2023 and 2024.

See: Media Release; CPS 230

APRA clarifies expectations regarding commercial property lending

On 13 February 2025, APRA published a letter to authorised deposit-taking institutions clarifying APRA’s expectations regarding pre-sales and commercial property lending. (Letter). The Letter clarifies APRA's letter issued in March 2017, which shared APRA's high-level observations and conclusions from its thematic review of commercial property lending.

APRA’s requirements and guidance for prudent credit risk management relevant to commercial property lending are contained in APS 220 and APG 220.

See: Media release; February 2025 letter; March 2017 letter

Insurance

Treasury releases technical consultation on the ban on the use of adverse genetic testing results in life insurance

On 13 February 2025, the Assistant Treasurer announced plans to ban the use of adverse predictive genetic testing results in life insurance. The decision followed an earlier consultation in November 2023, which sought feedback on both the impacts of life insurers using genetic test results in underwriting on genetic testing and research, as well as a range of potential policy responses.

The total ban under the current consultation will be subject to a 5 yearly review to ensure there are no unintended consequences.

Responses to the consultation are due by 12 March 2025.

See: Media Release; November 2023 Consultation; Consultation

AFCA updates Add-on Insurance Fact Sheet

On 17 February 2025, AFCA has published a new fact sheet on add-on insurance.

Specifically, the new add-on insurance fact sheet:

• explains how reasonable awareness of loss applies to the sale of add-on insurance including as to time limits for submitting complaints to AFCA

• clarifies how AFCA will generally assess complaints involving add-on insurance.

See: Media Release; Add-on Insurance Fact Sheet

Superannuation

ASIC calls out superannuation trustees for weak scam and fraud practices

On 30 January 2025, ASIC announced that it had written to superannuation trustees urging them to strengthen anti-scam practices, or risk exposing members to harm.

The open letter, signed by ASIC Commissioner Simone Constant, outlined guidance for superannuation trustees in preventing, detecting and responding to scams and fraud activity.

This letter followed ASIC's review of 15 superannuation trustees, which found that none of the 15 had an organisation-wide scams strategy in place.

In 2023, ASIC published Report 761 Scam prevention, detection and response by the four major banks and in 2024, ASIC published Report 790 Anti-scam practices of banks outside the four major banks , specific to the banking industry.

See: Media Release; Report 761 ; Report 790

Treasury announces mandatory service standards for the superannuation industry

On 28 January 2025, the Assistant Treasurer announced mandatory and enforceable service standards for all large APRA regulated superannuation funds.

These reforms are intended to strengthen the superannuation system by improving member outcomes and improve how funds engage with their members and put member interests at the heart of service delivery.

The new standards will initially target critical areas where complaints data shows the greatest need for improvement, such as:

• the timely and compassionate handling of death benefits;
• fair and efficient processing of insurance claims; and
• clear, respectful and accessible communications with members.

See: Media Release

Other

ASIC updates guidance for applicants applying for ASIC relief or no-action letters

On 13 February 2025, ASIC released its updated regulatory guides Regulatory Guide 51Applications for relief  (RG 51) and Regulatory Guide 108 No-action letters (RG 108).

The updates centralise ASIC guidance regarding relief and no-action letters by incorporating related guidance and amend outdated references.

ASIC states that it took on board feedback they received from stakeholders during the consultation process under Consultation 11 Proposed updates to RG 51 and RG 108 (CS 11).

In response to the feedback, ASIC:

• updated RG 108 to include a reference to relevant content in RG 51 to consider when making a request for a no-action letter;
• updated RG 51 to include a reference that an applicant may have a right to seek review of ASIC’s decision to the Administrative Review Tribunal;
• updated RG 51 to remove the proposed reference in Table 2 that a cost and benefit analysis needed to accompany an application; and
• adopted technical or stylistic recommendations from the consultation process to enhance readability.

See: Media Release; Regulatory Guide 51 Applications for relief (RG 51); Regulatory Guide 108 No-action letters (RG 108); Consultation 11 Proposed updates to RG 51 and RG 108 (CS 11)

Parliament passes scams prevention legislation

On 13 February 2025, the Scams Prevention Framework Bill 2025 (Framework), passed both Houses of Parliament. The Framework requires designated entities to prevent, detect, disrupt, respond and report scams and attempted scams.

AFCA welcomed the passing of the Framework and noted that the Government had earlier indicated its intention to designate AFCA as the single external dispute resolution scheme for scams, under the Framework. AFCA considers this to be creating a “single door” for consumers to access redress, by bringing scam complaints to AFCA about digital platforms and telecommunications firms in addition to banks and other financial firms.

Treasury, in a separate media release, stated that the Government will initially designate banks, telcos, and social media companies under the Framework. Those businesses will be subject to comprehensive and enforceable sector‑specific rules for what they must do to protect Australians.

See: AFCA Media Release Treasury; Treasury Media Release

Authors: Narelle Smythe, Partner; Samantha Carroll, Partner; Lisa Simmons, Partner; Rehana Box, Partner; Con Tzerefos, Partner; Scott Charaneka, Partner; Hannah Glass, Special Counsel; Geena Davies, Senior Associate; Greg Patton, Senior Associate; Nicole Mazurek, Senior Associate; Kim Yen Nguyen, Senior Associate; Nicky Thiyavutikan, Senior Associate; Justin Ho, Senior Associate; Holly Marchant, Senior Associate and Nicholas Dennis, Senior Associate.