Financial Services and Credit Monthly Update February 2026

CONSUMER CREDIT

Treasury responds to Senate inquiry on BNPL reforms

The Treasury has published the Federal Government’s response to the Senate Economics Legislation Committee’s inquiry into the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024. The Bill, which was enacted in December 2024, introduced reforms affecting consumer credit, including the regulation of buy now pay later (BNPL) products. In its response, the Government addressed recommendations made in the Committee’s dissenting report, including calls for further consultation on delegated legislation, changes to fee caps and responsible lending obligations, and proposals to align aspects of the BNPL framework with New Zealand.

CONSUMER PROTECTION

Treasury consults on new unfair trading practices regime

The Treasury has released exposure draft legislation for consultation proposing a new unfair trading practices regime under the Australian Consumer Law. The draft measures would introduce a general prohibition on conduct that unreasonably manipulates consumers or distorts the environment in which they make decisions, where that conduct causes (or is likely to cause) consumer detriment. The consultation also proposes targeted reforms to address specific practices, including enhanced protections around subscription contracts and requirements to disclose mandatory fees to address so‑called “hidden” or drip pricing.

The proposed amendments are intended to operate alongside existing misleading, deceptive and unconscionable conduct provisions, and would expand the scope of conduct capable of regulatory action. If enacted, the new regime would commence on 1 July 2027. The consultation closed on 23 February 2026.

Treasury reviews amended unfair contract terms regime

The Treasury has commenced a consultation reviewing the operation of Australia’s amended unfair contract terms (UCT) protections. The review opened on 24 February 2026 and is examining how the strengthened UCT regime is working in practice following its expansion and the introduction of civil penalties.

The consultation also seeks views on whether, and how, the UCT protections should apply to the franchising sector. The Treasury is seeking feedback on the effectiveness of the current provisions, any unintended consequences, and whether further clarification or adjustment is required to meet the policy objectives. Submissions close on 17 March 2026.

COMPETITION

ACCC issues guidance on specific purpose funds under new Franchising Code

The Australian Competition and Consumer Commission (ACCC) has published updated guidance on the operation of “specific purpose funds” for franchise businesses following the introduction of the new Competition and Consumer (Industry Codes – Franchising) Regulations 2024 (Cth) (Franchising Code). The guidance reflects changes that took effect from 1 November 2025 under the Franchising Code, which replaced the former marketing and cooperative fund concepts with a broader category of specific purpose funds. 

Under the new Franchising Code, obligations that previously applied only to marketing funds now apply to all funds collected for a defined common purpose, including technology, training, refurbishment, environmental or sustainability projects. The guidance outlines requirements for disclosure documents, record‑keeping, annual financial statements and permissible uses of fund money. The ACCC notes that franchisors must provide franchisees with accurate and truthful information about how specific purpose funds are administered and spent, and must comply with expanded reporting and audit requirements.

CORPORATE

ASIC removes residential addresses from company extracts

From 2 February 2026, company extracts purchased through the Australian Securities and Investments Commission (ASIC) website no longer include the residential addresses of company officeholders. The change affects the most commonly purchased extracts and means those details are no longer available through that access point. ASIC confirms the information has not been removed from the registers entirely. Residential addresses will remain accessible to law‑enforcement agencies, government bodies and others who need the information for regulatory, compliance or business purposes.

ASIC will engage with registry intermediaries about the practical impact of the change and monitor how it affects users. The update sits alongside ASIC’s broader RegistryConnect program, which aims to improve the quality and integrity of registry data, including through the future linking of director IDs to the companies register. A Treasury consultation on draft legislation to improve Australia’s business registers closed on 10 February 2026.

Bill introduced to overhaul financial reporting standard‑setting

The Federal Government has introduced legislation to restructure Australia’s financial reporting standard‑setting framework. The Bill, introduced on 12 February 2026, would establish a new body, External Reporting Australia, as a single “one‑stop shop” for accounting, auditing and assurance, and sustainability standards.

Under the proposal, the standard‑setting functions of the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council would be consolidated within External Reporting Australia. The new body would operate through technical standard‑setting boards, including a dedicated board for sustainability reporting. Existing accounting and auditing standards would continue in force until amended or replaced.

The legislation follows earlier consultation on reforms to Australia’s financial reporting architecture and is intended to provide a more streamlined and responsive governance structure, particularly in light of evolving international and sustainability reporting developments.

ASIC data shows sharp rise in corporate governance misconduct reports

ASIC has reported a significant increase in reports of misconduct during the second half of 2025, with corporate governance issues emerging as a major driver. Between 1 July and 31 December 2025, ASIC received 9,686 reports of misconduct, raising 13,036 individual issues. Corporate governance matters accounted for around 40 per cent of all issues reported, making it one of the largest categories identified.

The reported governance issues included failures to provide company records to liquidators, insolvency‑related concerns, shareholder issues and allegations of fraud. ASIC noted that the number of governance‑related issues rose to 5,217, up from 3,819 in the previous six‑month period. Overall reports of misconduct increased by 28 per cent compared with the first half of 2025, a rise ASIC attributed in part to improvements made to its online reporting systems in June 2025.

ESG

Treasury consults on sustainable investment product labelling

The Treasury has opened consultation on the policy design of a proposed sustainable financial product labelling regime. The consultation paper seeks feedback on how a standardised labelling framework could apply to investment products marketed as sustainable, ethical or ESG (environmental, social and governance) focused.

The paper canvasses the objectives of a labelling regime, potential label categories, and how labels might reflect different investment approaches, such as exclusions, stewardship or sustainability‑themed strategies. It also examines how labelling would interact with existing disclosure obligations and misleading or deceptive conduct provisions, including in the context of “greenwashing”. Other issues raised include the evidentiary basis required to support a label, thresholds for when labelling obligations would be triggered, and alignment with international approaches. The consultation is open until 13 March 2026.

FINANCIAL ADVICE

ASIC reviews advice licensees using lead generation services

ASIC has commenced a new review of financial advice licensees that use lead generation services, focusing on practices that may inappropriately or unnecessarily encourage consumers to switch superannuation. Lead generation involves marketing activities designed to create consumer interest and refer potential clients to financial services businesses. ASIC has raised concerns that some lead generation practices in the financial advice and superannuation sectors may expose consumers to a risk of significant losses. As part of the review, ASIC is identifying advice businesses that use these services and examining the nature of their arrangements, with the potential for disruptive or enforcement action where appropriate.

ASIC has also published a list of known lead generators, referral partners, and advice licensees or corporate authorised representatives that have acquired leads since 1 July 2024, noting that inclusion on the list does not indicate a breach of the law. The list will be updated during the course of the review to improve transparency for consumers.

FINANCIAL MARKETS

RBA publishes guidance on CS facility resolution powers

The Reserve Bank of Australia (RBA) has published guidance on the Australian clearing and settlement (CS) facility resolution regime, following consultation with industry. The guidance explains when and how the RBA would generally expect to use its crisis resolution powers over domestically incorporated CS facilities. Those powers were introduced by amendments to the Corporations Act 2001 (Cth) (Corporations Act) in 2024 and are intended to allow the RBA to respond to threats to the continuity of critical CS services or to financial system stability. The document outlines key principles guiding the use of resolution powers, the circumstances in which a CS facility may enter resolution, the RBA’s expected approach during resolution, and how a resolution may be exited.

ASIC extends short selling relief for precious metal exchange‑traded products

ASIC has extended its conditional short selling relief for market makers in certain precious metal‑backed exchange‑traded products. The changes are made by ASIC Corporations (Amendment) Instrument 2026/24, which amends the ASIC Corporations (Short Selling) Instrument 2018/745, and took effect from 3 February 2026.

The amended instrument allows appointed market makers of specified structured products referencing precious metals to short sell those products in the course of market making, on conditions aligned with existing relief for Exchange Traded Fund (ETF) market makers. It also adds Global X Physical Gold Structured as an approved product that exchange‑traded option (ETO) market makers may short sell to hedge risks arising from making a market in listed options. The instrument further extends covered short sale transaction reporting relief to market makers of the specified structured products and updates terminology to reflect current exchange‑traded product naming conventions.

FINANCIAL PRODUCTS

Treasury consults on strengthening oversight of managed investment schemes

The Treasury has released a consultation paper on proposals to enhance the oversight and governance of managed investment schemes (MIS), against the backdrop of recent scheme failures and concerns about gaps in the existing regulatory framework. The consultation examines whether current obligations on responsible entities provide sufficient protection for investors and appropriate supervisory tools for regulators.

The paper canvasses potential reforms to improve governance standards, including clearer duties for responsible entities, stronger compliance and risk management expectations, and enhanced arrangements for scheme valuation, liquidity and conflicts management. It also considers options to bolster ASIC’s regulatory powers and oversight, including whether changes are needed to monitoring, intervention and enforcement mechanisms for MIS. The consultation closed on 27 February 2026.

ASIC issues guidance for employee entitlement scheme operators

ASIC has released new guidance for operators of employee entitlement schemes, setting out how these schemes will be regulated once the current regulatory relief expires on 1 April 2026. The guidance is contained in Information Sheet 295 and follows consultation on reforms to the treatment of employee redundancy and long service leave funds.

The guidance explains ASIC’s new regulatory approach, transitional arrangements and the process for applying for an Australian financial services (AFS) licence. From 1 April 2026, operators relying on transitional relief will be subject to additional transparency and governance requirements and must apply for an AFS licence with appropriate authorisations by 1 September 2026. New operators entering the market after that date will also need to be licensed. ASIC has indicated that licensed operators will continue to receive relief from managed investment, product disclosure and hawking provisions, subject to conditions.

PRIVACY AND DATA

OAIC issues updated privacy guidance for AML/CTF reporting entities

The Office of the Australian Information Commissioner (OAIC) has released updated guidance on how reporting entities must handle personal information when complying with obligations under the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (Cth) (AML/CTF Act). The guidance was published on 27 February 2026.

The guidance applies to all AML/CTF reporting entities and their authorised agents, including small businesses that would otherwise be exempt from the Privacy Act 1988 (Cth) (Privacy Act). It also anticipates the extension of AML/CTF obligations from 1 July 2026 to “tranche 2” entities such as real estate professionals, dealers in precious metals and stones, and professional service providers including lawyers and accountants. Changes affecting existing “tranche 1” entities commence from 31 March 2026.

The OAIC emphasises that reporting entities must limit collection of personal information to what is reasonably necessary for AML/CTF compliance, maintain clear privacy policies and collection notices, and minimise retention of identity documents where not required by the AML/CTF regime. The guidance is supported by checklists and practical tools for implementation.

SUPERANNUATION

ASIC review finds gaps in super funds’ anti‑scam website disclosures

ASIC has released the results of a desktop review of anti‑scam and fraud content on the websites of 47 superannuation funds open to members. The review benchmarked superannuation fund disclosures against comparable content from the four major banks and assessed availability, quality and actionability.

ASIC found the banks met more than 80% of assessed criteria, while most funds met only 40–60%. Common issues included information that was hard to find or absent altogether, outdated or generic explanations, and limited practical guidance for members. Only 19% of super funds clearly defined what constitutes a scam, around one‑third provided messaging on common warning signs, and about one in five offered a dedicated channel for reporting scams or fraud. ASIC has contacted selected trustees about the findings and pointed to existing guidance and developments under the Commonwealth’s Scams Prevention Framework, which may be extended to superannuation in the future.

Draft legislation to allow access to perpetrators’ super for compensation

The Treasury has released draft legislation for consultation that would allow victims and survivors of child sexual abuse to access a perpetrator’s superannuation to satisfy court‑ordered compensation. The proposal would permit victims to apply to the Australian Taxation Office for information about a perpetrator’s super interests and to seek the release of certain amounts where compensation orders remain unpaid. It would also make compensation debts survive a perpetrator’s bankruptcy, allowing ongoing enforcement despite insolvency. The consultation closed on 20 February 2026.

Legislation introduced to strengthen superannuation system

The federal government has introduced the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 (Cth) to Parliament, aimed at boosting retirement outcomes for low‑income earners while tightening the targeting of superannuation tax concessions. The legislation increases the Low Income Superannuation Tax Offset (LISTO), lifting the income threshold from $37,000 to $45,000 from 1 July 2027 and increasing the maximum payment to $810, reflecting recent rises in the Superannuation Guarantee rate. The LISTO settings would also be formally linked to income tax thresholds and the Superannuation Guarantee rate going forward. The Bill also implements changes to reduce tax concessions for individuals with total superannuation balances above $3 million from 1 July 2026. The measures form part of a broader package of superannuation reforms currently before Parliament.

New framework targets uplift in superannuation retirement outcomes

The Treasurer and Assistant Treasurer have released a new Retirement Reporting Framework and Best Practice Principles for Superannuation Retirement Income Solutions, aimed at strengthening the retirement phase of Australia’s superannuation system.

The reforms respond to the growing scale of the retirement phase, with more than 2.5 million Australians expected to retire over the next decade. The Best Practice Principles provide non‑binding guidance for trustees on the design and delivery of retirement income products, including understanding member needs, developing fit‑for‑purpose solutions and improving member engagement around retirement decisions.

The Retirement Reporting Framework will introduce greater transparency by collecting and publishing data on industry progress in the retirement phase. The Australian Prudential Regulation Authority (APRA) will be responsible for collecting and releasing the data, providing insights into fund offerings and member outcomes. The measures build on the existing Retirement Income Covenant and are intended to support improved retirement outcomes across the superannuation sector.

AML/CTF

AUSTRAC consults on targeted updates to new AML/CTF Rules

AUSTRAC has consulted on a package of targeted amendments to the Anti‑Money Laundering and Counter‑Terrorism Financing Rules 2025 (Cth) (AML/CTF Rules), aimed at refining and correcting the framework introduced following passage of the Anti‑Money Laundering and Counter‑Terrorism Financing Amendment Act 2024 (Cth) (AML/CTF Amendment Act).

Key proposed amendments include changes to the reporting group framework, intended to reduce administrative burden when establishing a reporting group and selecting a lead entity. AUSTRAC has also proposed technical corrections and clarifications to address issues identified since the AML/CTF Rules were tabled, and to ensure the rules fully support the operation of the amended AML/CTF Act. The exposure drafts also update class exemptions and related machinery provisions. The consultation closed on 20 February 2026.

Draft AML/CTF transitional rules released

The Department of Home Affairs has released an exposure draft of the Anti‑Money Laundering and Counter‑Terrorism Financing Transitional Rules 2026 (Cth) for consultation. The draft rules are intended to support implementation of the AML/CTF reforms enacted by the AML/CTF Amendment Act.

The exposure draft sets out transitional arrangements to phase in new obligations and provide additional time for reporting entities to adjust systems and processes. Measures covered include transitional periods for initial customer due diligence, extended timeframes for appointing and notifying AML/CTF compliance officers, staggered timing for first independent evaluations, and deferred application of certain obligations for virtual asset service providers and financial advisers newly captured by the regime. The consultation closes on 6 March 2026.

DISPUTES AND ENFORCEMENT

ASIC reports record penalties and remediation outcomes in late 2025

ASIC has released its enforcement and regulatory update for the second half of 2025, reporting the highest six‑monthly civil penalty total in its history. Between July and December 2025, courts imposed $349.8 million in civil penalties following ASIC enforcement action, alongside $583 million in remediation, refunds and other payments expected to flow back to Australians.

The penalties followed successful proceedings against major financial institutions and superannuation trustees, including ANZ, NAB, Cbus and RAMS Financial Group. ASIC reported that the largest outcome was a $250 million combined penalty against ANZ, while other matters related to failures in member services, compliance systems and risk management. ASIC’s update also records heightened enforcement activity during the period, including 123 new investigations, 23 new civil proceedings and 11 criminal prosecutions.

ACCC sets enforcement priorities for the year ahead

The ACCC has announced its compliance and enforcement priorities for 2026–27, with a renewed focus on manipulative conduct in the digital economy, misleading pricing claims and competition in essential services.

Key areas of focus include manipulative and false practices in digital markets, the online sale of unsafe goods, and misleading pricing and promotional claims, particularly in supermarkets and retail. The ACCC will also target competition issues in essential services such as energy, telecommunications and aviation, reflecting ongoing cost‑of‑living pressures.

Enduring priorities remain in place, including cartel conduct, misuse of market power, exclusionary conduct and anti‑competitive agreements. The ACCC has indicated it will continue to use its full regulatory toolkit, combining enforcement action with market monitoring and compliance activity, and will maintain a focus on accountability where conduct undermines competition or consumer trust.

AFCA reports record complaints and compensation outcomes for 2025

The Australian Financial Complaints Authority (AFCA) has reported a record of 111,373 complaints in the 2025 calendar year, a 14% increase on 2024. Complaints rose across all product areas, including banking and finance, insurance, investments and advice, and superannuation. Consumers and small businesses secured $643 million in compensation and refunds through AFCA during the year, up 120% on the previous year.

Investment and advice complaints increased by 58%, driven largely by major collapses. AFCA received 2,162 complaints relating to the Shield and First Guardian Master Funds and has issued 44 decisions to date, with around 500 investigations underway. AFCA also issued its 1,000th determination relating to Dixon Advisory, with around 900 further matters under investigation. Superannuation complaints rose 29% to 7,687, mainly reflecting delays in claims handling and disputes over claim decisions.

AFCA updates EDR guide on insurance claim delays

AFCA has published an updated External Dispute Resolution Response Guide for claim delay complaints, reflecting increased volumes of disputes about delays in general insurance claims. The revised guide aligns with current best practice and recent changes to AFCA’s processes, and is intended to assist insurers in responding more effectively once a matter has progressed beyond internal dispute resolution. The guide sets out the information AFCA expects to receive in delay‑related complaints, with the aim of improving the quality and completeness of responses and supporting earlier resolution.

Petra Capital fined for regulatory data reporting failures

The Markets Disciplinary Panel (MDP) has fined Sydney-based stockbroking firm Petra Capital Pty Ltd (Petra Capital) $205,350 for misreporting regulatory data on more than 3,600 occasions. Following an ASIC investigation, the MDP found Petra Capital breached the market integrity rules by failing to provide accurate client reference information when reporting trades. Inconsistent use of client identifiers meant a single client appeared as multiple clients on 3,632 occasions.

The errors arose after a system update and affected 14,741 trades executed between 3 March 2022 and 5 December 2023. The MDP described the conduct as “careless”, noting that Petra Capital should have taken steps to ensure its reporting format complied with legal requirements, including regular review of systems and coding assumptions. Petra Capital has paid the infringement notice.

APRA partially lifts liquidity add‑ons for Macquarie Bank

APRA has reduced the liquidity add‑on requirements imposed on Macquarie Bank Limited (Macquarie) following supervisory action taken in 2021 and 2022. The add‑ons were introduced after material breaches identified weaknesses in the bank’s liquidity risk controls and operational risk management.

In April 2021, APRA required Macquarie to increase its Net Cash Outflow (NCO) overlay by 15% for Liquidity Coverage Ratio purposes and to reduce Available Stable Funding (ASF) by 1% for the Net Stable Funding Ratio calculation. After further NCO calculation errors were identified, APRA increased the NCO overlay by a further 10% in April 2022.

Following a supervisory review, including a Financial Accountability Regime attestation and independent assurance, APRA concluded that remediation had progressed sufficiently to support partial relief. The NCO add‑on has been reduced to 15% and the ASF adjustment removed, with immediate effect. Remaining NCO add‑ons will stay in place pending completion of outstanding remediation.

ASIC steps up investor outreach after First Guardian and Shield collapses

ASIC has announced further measures to assist investors affected by the collapse of the First Guardian and Shield Master Funds. Around 11,000 people invested approximately $1.1 billion in the funds, yet fewer than 2,000 have lodged complaints with AFCA.

From 6 February 2026, ASIC began sending additional information to investors, directing them to a new consumer website, takeyoursuperback.com. The site, developed independently by Super Consumers Australia with ASIC funding, provides guidance on lodging complaints with AFCA, relevant deadlines and access to support services.

ASIC noted that about 4,000 consumers have already received around $421 million in payments from Macquarie and compensation from Netwealth Investments Limited under court‑enforceable undertakings. ASIC’s investigations continue, spanning 26 matters involving advisers, lead generators, trustees, auditors and scheme operators. AFCA has issued recent lead decisions awarding compensation in some cases, though outcomes are not guaranteed.

Tribunal partly upholds privacy findings in Bunnings facial recognition case

The Administrative Review Tribunal has handed down its decision relating to the use by Bunnings Group Limited (Bunnings) of facial recognition technology (FRT). The decision largely affirmed the Privacy Commissioner’s findings while narrowing one aspect of the alleged breach. The Tribunal agreed that Bunnings contravened Australian Privacy Principles (APP) 1 and 5 when it deployed the FRT in stores without adequate transparency or notification to customers. It also found Bunnings should have undertaken a formal, documented privacy risk assessment before rolling out the system.

However, the Tribunal departed from the Commissioner’s conclusion that Bunnings breached APP 3.3, finding the retailer could rely on an exemption from consent requirements for the limited purpose of addressing repeat retail crime and protecting staff and customers. In doing so, the Tribunal confirmed relevant factors in assessing exemptions, including effectiveness, proportionality and the availability of less privacy‑intrusive alternatives. The decision also reaffirmed that even momentary collection of biometric information can constitute a “collection” under the Privacy Act.

FIIG penalised over cyber security failures

The Federal Court has ordered FIIG Securities Limited (FIIG) to pay $2.5 million in penalties and $500,000 in costs following ASIC proceedings over prolonged cyber security failures. The action arose from a 2023 cyber‑attack in which approximately 385 gigabytes of confidential client information were stolen, with some data later published on the dark web. FIIG notified around 18,000 clients that personal information, including identity and financial details, may have been compromised.

FIIG admitted it breached its AFS licence obligations by failing, over more than four years, to maintain adequate cyber security measures proportionate to the size of its business and the sensitivity of the data it held. It also accepted that compliance with its own policies could have enabled earlier detection and limited the breach. In addition to the financial penalty, the Court ordered FIIG to implement a compliance program overseen by an independent expert to strengthen its cyber security and resilience arrangements.

ASIC sues Auto & General over alleged misleading Budget Direct discount claims

ASIC has commenced Federal Court proceedings against Auto & General Services Pty Ltd (Auto & General), alleging misleading representations in advertising for Budget Direct insurance products about online policy discounts.

ASIC alleges that between March 2020 and July 2024, Auto & General promoted online discounts of up to 30 per cent for car, home and motorbike insurance policies purchased through Budget Direct, with the advertisements viewed by millions of consumers. ASIC claims the advertising was misleading because customers were not clearly told that the discount could be removed if they made certain changes to their policy during the first year, such as updating an address or changing payment frequency.

According to ASIC, about 39,000 customers lost their advertised discount after making policy amendments, with an average loss of nearly $100 per customer, totalling around $3.3 million. ASIC also alleges Auto & General was aware of the issue for several years before addressing it. Auto & General has paid remediation to affected customers, and ASIC is seeking declarations and civil penalties.

Westpac ordered to remove adverse credit reporting over minor mortgage shortfall

The NSW Supreme Court has ordered St George Bank, a division of Westpac Banking Corporation (Westpac) to remove adverse repayment history information recorded against a home loan customer arising from a one‑month shortfall of $44.11. The shortfall occurred after Westpac advised the borrower that her interest rate and monthly repayment would reduce “after 10 July 2025”. The borrower paid the reduced amount early, leaving a small technical shortfall, which was fully remedied within weeks. Despite this, Westpac reported adverse repayment history for July and August 2025 and declined to amend the record when requested by the borrower.

The Court held that, even if a default had occurred, it was not fairly characterised as adverse. Once the shortfall was rectified, maintaining the credit report was inaccurate, incomplete and misleading for the purposes of the Privacy Act. The Court ordered the adverse entries removed, transferred the borrower’s damages claim to the District Court, and ordered Westpac to pay costs to that point.