Financial Services Snapshots

Financial Markets

Treasury's foreign investment reforms strengthen framework

On 14 March 2025, Treasurer Jim Chalmers released new data outlining the performance of the Government's reforms to streamline Australia's foreign investment framework. The reforms were designed to attract investment into the economy while protecting national interests.

The Government published updated guidance notes to provide greater clarity to investors, noting:

• Information on foreign investment in new and established Built to Rent developments, including lower application fees to support increased housing supply.
• Eligibility criteria for partial refunds on application fees for unsuccessful proposals in competitive bid processes.
• Clarified tax arrangement that will attract greater scrutiny in the foreign investment assessment process to ensure foreign investors are taxed adequately.

See: Media Release; Guidance Notes

RBA releases risk assessment on proposed decommissioning of BECS

On 11 March 2025, the RBA released its risk assessment into the payments industry's proposed decommissioning of the Bulk Electronic Clearing System (BECS). The risk assessment concluded that there was a lack shared vision and insufficient coordination at the industry level concerning the transition to alternative account-to-account payment systems.

The risk assessment makes a set of recommendations to industry in relation to transition, including:

• Establishing a clear vision for future state and strategic objectives for account-to-account payments in Australia, in collaboration with the Government and the RBA with due recognition of public interest consideration
• Comprehensively consider the alternatives for achieving the target future state
• Establish a transition plan that includes appropriate mechanisms for coordination and stakeholder engagement once that future state is agreed upon.

The RBA expects industry to address the recommendations and reprioritise to ensure the intended benefit of any transition. The RBA will provide ongoing oversight of transition activities, including conducting assessments of the implementation of these recommendations.

See: Media Release

ASIC updates Market Disciplinary Panel regulatory guidance

On 20 March 2025, ASIC released minor updates to Regulatory Guide 216 Markets Disciplinary Panel (MDP) (RG 216) to reflect the recent MDP decision on the application of the new penalty regime imposed by the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 and the current MDP processes.

The new penalty regime has significantly increased the maximum penalties for conduct occurring on or after 13 March 2019.

Recent MDP decisions have stated that a penalty should:

• be proportionate to the conduct of the market participant, that it should strike reasonable balance between deterrence and oppressive severity;
• promote market integrity by acting as a deterrent to any future misconduct; and
• be just and appropriate, taking the totality of the conduct into account and whether there are factually related contraventions.

The updates to RG 216 reflect current MDP processes, including that MDP hearings can now be conducted virtually.

This version replaces guidance issued in January 2021.

See: Media Release

Consumer Credit

ASIC flags potential breaches in payday lending practices

On 13 March 2025, ASIC released Report 805 Falling short: Compliance with the small amount credit contract obligations (REP 805), setting out its observations from its review, following changes to laws governing small amount credit contracts in 2022 and 2024 under the Financial Service Reform Act 2022 (FSR Act).

The key concerns of small and medium amount credit contract providers noted were:

• entering into unsuitable contracts with consumers; or
• failing to identify an appropriate target market and distribute their products accordingly.

ASIC affirmed that lenders who changed their product offerings following the FSR Act reforms must reconsider their regulatory obligations, specifically considering consumer's requirements and objectives before entering the credit contracts. ASIC also called on lenders to set appropriate review triggers in their target market determinations to adequately monitor the risk of distribution products outside of their target market.

ASIC is continuing to investigate these business models designed to avoid consumer protects as part of its enforcement priorities for 2025, and will consider enforcement action in the sector.

See: Media Release; REP 805

Banking

AFCA welcomes changes to authorisation conditions

On 11 March 2025, AFCA announced that it welcomed the Government's decision that will enable AFCA to consider the actions of 'receiving banks' in scam complaints.

Currently, AFCA can only consider the actions of the bank that has the direct customer relationship with the person or entity who has lodged a complaint. These changes will come into effect in 12 months' time.

See: Media Release

Fintech

Treasury releases statement on developing an innovative Australian digital asset industry

On 21 March 2025, the Treasury released a statement with a proposed approach to reform for the Australian digital asset industry.

The framework will focus on the operators of Digital Asset Platforms (DAPs) and seeks to not impose new regulatory burden on digital asset issuers themselves or businesses that use digital assets for non-financial purposes.

The Government will also implement an updated framework for payments service providers (PSPs) which will revise the existing licencing regime for non-cash payment facilities to cover the wide range payment products and services now provided in Australia. This will cover the holding of monetary for making payments, whether in traditional account-based stored value facility (SVFs) or in payment stablecoins.

Businesses operating DAPs or issuing tokenised SVFs (such as stablecoins) will have to comply with:

• rules for safeguarding customer assets (based on existing 'client monies' rules and the existing 'minimum standards custodial and depository services'), and requirements for the redemption of stored value represented by tokens; and
• new obligations tailored to address the unique risks of DAPs and tokenised SVFs (e.g. disclosure rules for digital assets without issuers, disclosure of information about composition of reserves, etc).

The paper acknowledges de-banking as a risk to the Digital Asset industry and sets out future workstreams to be considered. The Government intends to release draft legislation in 2025 for public consultation

See: Publication