Financial Services and Credit Monthly Update July 2025

CONSUMER CREDIT

Updated guideline on banks’ financial difficulty programs

On 8 July 2025, the Australian Banking Association (ABA) released an updated industry guideline outlining best practice for banks assisting customers in financial difficulty. The revised document builds on existing obligations and the Banking Code of Practice, aiming to streamline support processes and improve customer outcomes. Key changes include a stronger emphasis on early identification of financial stress, improved communication strategies, and tailored support options. The guideline encourages banks to proactively engage with customers showing signs of hardship and to offer assistance that reflects individual circumstances.

CONSUMER PROTECTION

Banks launch name-matching technology to combat scams

On 2 July 2025, the ABA announced that Australian banks had commenced rolling out a new name-checking service, Confirmation of Payee, designed to reduce mistaken payments and scams. The service verifies whether the account name, BSB, and number entered by a customer match the recipient’s bank records, displaying the result before payment is made. The system flags mismatches and provides warnings, allowing customers to reconsider before proceeding with payment.

Developed by Australian Payments Plus, the technology is part of the banking sector’s Scam-Safe Accord and backed by a $100 million investment. It will be implemented across all banks, including mutuals.

Fake ASIC websites used in phishing scams

The Australian Securities and Investments Commission (ASIC) has issued a warning about fraudulent websites impersonating its official domains, including ASIC Connect and asic.gov.au. The scam sites mimic the appearance and functionality of legitimate ASIC platforms, sometimes embedding links to real ASIC pages to enhance credibility. These sites are being used to harvest sensitive personal and financial information from unsuspecting users. Some fake sites reportedly display fabricated company search results, further misleading visitors. ASIC has clarified that its only legitimate domains are asic.gov.au, asicconnect.asic.gov.au, and connectonline.asic.gov.au.

Users are advised to verify web addresses carefully before entering any information and to report suspicious sites via ASIC’s online inquiry form. Those who believe they have been scammed are urged to cease contact, notify their financial institution, and seek assistance from IDCARE and Scamwatch.

Authorities crack down on money mule accounts

On 23 July 2025, the Australian Federal Police (AFP) and the ABA issued a joint warning against the growing use of “money mules” to launder criminal proceeds. Australians are being recruited, often via job scams, romance scams, or social media, to rent or sell access to their bank accounts for as little as $200. These accounts are then used to transfer illicit funds, obscuring their origin.

Criminal syndicates are increasingly directing mules to move funds through cryptocurrency ATMs and global money transfer apps, making detection more difficult. In one case, a Sydney woman was jailed for renting 10 accounts used to launder $3.8 million. Authorities emphasised that renting, buying, or selling bank accounts is illegal and can carry severe penalties, including life imprisonment. The AFP-led Joint Policing Cybercrime Coordination Centre is working with banks to identify and shut down mule accounts. The public is urged to report suspicious activity and avoid offers involving account use.

CORPORATE

Estimated industry funding levies for 2024–25

On 3 July 2025, ASIC published its Cost Recovery Implementation Statement (CRIS) for 2024–25, outlining how it proposes to recover an estimated $349.3 million in regulatory costs from industry. The CRIS provides indicative levies for each of ASIC’s 52 regulated subsectors, enabling entities to plan for upcoming charges. A summary highlights material year-on-year cost variances (defined as changes exceeding both 10% and $1 million) across 16 subsectors. These figures are provisional; final levies will be confirmed in December 2025 and invoiced between January and March 2026.

ASIC consults on renewal of financial reporting relief instruments

On 7 July 2025, ASIC released a consultation paper proposing to remake five financial reporting-related legislative instruments due to sunset on 1 October 2025. The instruments provide targeted relief for specific entity types and reporting scenarios, including non-reporting entities, externally-administered bodies, stapled groups, and related schemes. The instruments under review include:

• ASIC Corporations (Non-Reporting Entities) Instrument 2015/841;

• ASIC Corporations (Post Balance Date Reporting) Instrument 2015/842;

• ASIC Corporations (Related Scheme Reports) Instrument 2015/839;

• ASIC Corporations (Stapled Group Reports) Instrument 2015/838; and

• ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251.

ASIC proposes to retain the substantive effect of the instruments, with minor amendments to update drafting style and clarify scope. Notably, the relief under ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251 will be clarified to exclude registrable superannuation entities. The consultation closed on 1 August 2025.

COMPETITION

Consultation opens on standards reform in regulation

On 3 July 2025, the Treasury launched a consultation on reforms aimed at improving how international and overseas standards are used and recognised in Australian regulation. The initiative, developed with the Department of Finance and other agencies, includes three key documents: a consultation paper, draft competition reform guidelines, and a best practice handbook.

The proposed reforms seek to reduce regulatory complexity and trade barriers by promoting clearer, more consistent use of standards. The competition reform guidelines provide a framework for applying National Competition Policy principles to enhance productivity and competition. The best practice handbook offers tools for policymakers to incorporate standards through risk-based assessments and conformity procedures. The consultation runs until 4 August 2025.

ACCC authorises sustainable finance collaboration

On 10 July 2025, the Australian Competition and Consumer Commission (ACCC) granted conditional authorisation for the Australian Sustainable Finance Institute and industry participants to collaborate on sustainable finance initiatives for five years. The authorisation permits information sharing to improve integration of natural capital data into financial decision-making, co-design investment structures, and to develop regulatory reform proposals. The collaboration aims to support sustainable farming practices, assist producers in meeting export sustainability requirements, and contribute to emissions reduction targets. The ACCC imposed five conditions to mitigate potential public detriments, including risks of reduced competition and coordinated conduct in financial markets.

Armaguard funding extended to sustain cash services

On 14 July 2025, the ABA and Linfox Armaguard Pty Ltd (Armaguard) announced that major banks and retailers agreed to extend financial support for Armaguard, injecting a further $25.5 million to maintain national cash distribution services through to December 2025. This follows approximately $50 million in funding provided over the past year. The extension aims to ensure continuity of cash-in-transit operations while stakeholders work on developing an independent pricing mechanism to underpin long-term sustainability.  

Consultation on banning non-compete clauses

On 25 July 2025, the Federal Government released a consultation paper proposing reforms to ban non-compete clauses in employment contracts. The move targets clauses that prevent workers from moving to better-paying jobs, with over three million Australians currently affected, including those in childcare, construction, disability support, and hairdressing. The paper seeks feedback on how best to implement the ban and whether additional restraints on worker mobility should also be addressed. It also canvasses complementary reforms to close loopholes in competition law that permit wage-capping or anti-poaching agreements between businesses. These proposals form part of the second tranche of the Government’s National Competition Policy reforms. Submissions are open until 5 September 2025.

DIGITAL ASSETS

ASIC grants relief for tokenised asset settlement pilots

On 10 July 2025, ASIC announced regulatory relief for industry participants in Project Acacia, a joint initiative of the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre. The relief facilitates testing of tokenised asset transactions, including those involving a pilot wholesale central bank digital currency (CBDC), between selected industry participants and financial institutions.

The relief supports 24 use cases, comprising 19 pilot transactions using real money and assets, and 5 proof-of-concept trials with simulated data. Asset classes include fixed income, private markets, trade receivables, and carbon credits. Settlement mechanisms span stablecoins, bank deposit tokens, and CBDC issued on distributed ledger platforms such as Hedera, Redbelly Network, R3 Corda, and Canvas Connect.

AUSTRAC imposes new rules on crypto ATM providers

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has introduced new conditions for cryptocurrency ATM providers aimed at curbing money laundering and terrorism financing (ML/TF) risks, and scam-related activity. Following a taskforce investigation, the regulator found widespread non-compliance with anti-money laundering and counter-terrorism (AML/CTF) obligations, including failures in customer due diligence and transaction reporting. With approximately 150,000 annual transactions totalling nearly $275 million, AUSTRAC flagged the sector as high-risk. The taskforce also identified older Australians as frequent users and potential scam victims. Several cases have been referred to law enforcement, resulting in the identification of money mules and offenders. New requirements include a $5,000 cap on cash deposits and withdrawals at crypto ATMs, mandatory scam warnings, and enhanced customer verification processes.

FINANCIAL PRODUCTS

ASIC consults on remaking deposit disclosure relief instrument

ASIC has proposed to remake the ASIC Corporations (Deposit Product Disclosure) Instrument 2015/683 (Cth) (Instrument), which provides ongoing relief from certain disclosure obligations for deposit products. The Instrument exempts authorised deposit-taking institutions (ADIs) from having to disclose interest rates in a Product Disclosure Statement (PDS) and the termination value and closing balance in periodic statements.

Originally introduced in 2015 to replace expiring transitional relief, the Instrument is scheduled to sunset on 1 October 2025. ASIC intends to remake it without changes, citing its continued effectiveness and utility. The relief is designed to avoid the burden of issuing a new or supplementary PDS each time interest rates change, provided that current rates are easily accessible to consumers. ADIs are still required to disclose any early termination fees or restrictions in the PDS. Consultation closed on 24 July 2025.

ASIC consults on renewal of foreign securities disclosure relief

On 9 July 2025, ASIC released a consultation proposing to remake six legislative instruments that provide disclosure relief for offers of foreign securities and interests to Australian investors. The instruments, due to sunset on 1 October 2025, facilitate cross-border offers by reducing duplicative compliance burdens where comparable foreign disclosure regimes apply or where offers to Australians are minimal.

The proposed instruments largely retain existing relief but include minor clarifications and would operate for a further five years. The relief also extends to advertising restrictions, allowing incidental publication in Australia of materials aimed at foreign markets. Consultation closes on 15 August 2025.

ASIC consults on overhaul of PDS disclosure guide

On 9 July 2025, ASIC released a consultation paper proposing significant updates to Regulatory Guide 168 (RG 168), which governs the preparation of PDSs. The proposed changes aim to consolidate fragmented guidance, reduce regulatory complexity, and improve clarity for industry participants.

Key proposals include integrating content from other regulatory guides and information sheets into RG 168, withdrawing those superseded documents, and removing guidance unrelated to PDSs (such as that on Financial Services Guides and Statements of Advice). ASIC also proposes reframing its commentary on misleading and deceptive conduct to focus on general disclosure concerns and clarifying the legislative basis for the Good Disclosure Principles. Submissions are due by 6 August 2025.

Consultation on sustainable investment labels

On 18 July 2025, the Federal Government launched a public consultation on a proposed labelling framework for sustainable investment products. The initiative, part of the Sustainable Finance Roadmap implementation, aims to clarify terms like “sustainable” and “green” when used in financial product marketing. The consultation paper invites feedback on how labels can help consumers identify and compare products aligned with sustainability goals. The move seeks to address greenwashing concerns and improve transparency in the market. Submissions are open until 29 August 2025. 

FINANCIAL SERVICES

ASIC consults on renewal of digital disclosure relief

On 9 July 2025, ASIC commenced consultation on proposals to remake two legislative instruments facilitating digital disclosure, both due to sunset on 1 October 2025. The instruments, ASIC Corporations (Facilitating Electronic Delivery of Financial Services Disclosure) Instrument 2015/647 and ASIC Corporations (Removing Barriers to Electronic Disclosure) Instrument 2015/649, enable financial services providers to deliver disclosures electronically with reduced compliance burdens.

ASIC proposes to remake both instruments for a further five years. Concurrently, it is also consulting on updates to Regulatory Guide 221 (RG 221), which provides guidance on digital disclosure practices. Proposed changes include simplified drafting, updated legislative references, and revised examples to reflect current digital delivery methods. Section D of RG 221 will be restructured to centralise guidance and clarify relevant obligations. Submissions can be made until 6 August 2025.

ASIC urges responsible AI use in banking sector

In a keynote address at the ABA Banking Conference on 23 July 2025, ASIC Chair Joe Longo outlined the regulator’s stance on artificial intelligence (AI) in financial services. While ASIC is not rushing to introduce new AI-specific regulation, Mr Longo emphasised that existing technology-neutral laws, such as directors’ duties under the Corporations Act 2001 (Cth) (Corporations Act), already provide a framework for responsible AI use. ASIC’s recent review of 23 licensees revealed governance gaps in AI risk management, prompting a warning that enforcement action will follow where misconduct occurs. Mr Longo highlighted examples of AI innovation in banking, including Westpac’s use of AI to assist fraud teams and CBA’s deployment of bots to disrupt scammers. He also flagged ASIC’s forthcoming report on fee harm to low-income customers, noting that AI should be used to proactively improve customer outcomes.

ASIC consults on industry code approval guidance

ASIC is seeking feedback on proposed updates to Regulatory Guide 183, which outlines its approach to approving financial services sector codes of conduct. The revised guidance reflects legislative changes since the last update, notably reforms introduced by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth). Key changes include clarification of ASIC’s role in relation to industry codes, criteria and processes for code approval, and simplification of the guide’s structure. Submissions are open until 1 September 2025.

ASIC consults on updates to conflicts management guidance

ASIC has released a consultation paper proposing updates to Regulatory Guide 181 Licensing: Managing conflicts of interest, the first revision since 2004. The proposed changes aim to reflect legal and policy developments and insights from ASIC’s surveillance of private markets. The revised guidance clarifies how Australian financial services (AFS) licensees should meet their obligation under section 912A(1)(aa) of the Corporations Act to manage conflicts of interest. Key updates include identification of types of conflicts, expectations for tailored and robust management arrangements, and a roadmap linking related obligations. The guidance is intended to apply broadly, excluding only conflicts arising entirely outside a financial services business. The consultation closes on 5 September 2025.

FINANCIAL SYSTEM

Consultation opens on cash distribution regulation

On 16 July 2025, the Council of Financial Regulators and the ACCC jointly released a consultation paper proposing a regulatory framework for cash distribution in Australia. The initiative responds to structural shifts in the payments landscape, with electronic transactions increasingly displacing cash. The paper highlights the role of cash in ensuring payment system resilience during outages and emergencies, and its continued importance as a store of value. It also notes growing economic pressures on the cash distribution network, especially in rural communities where service provision is costliest. Submissions are due by 15 August 2025.

RBA and APRA update memorandum of understanding

On 29 July 2025, the RBA and Australian Prudential Regulation Authority (APRA) released an updated Memorandum of Understanding (MoU), refining their coordination on financial stability matters. The revised MoU clarifies each agency’s roles and responsibilities and outlines protocols for consultation, liaison, and information sharing. It includes specific arrangements for cooperation on macroprudential policy, liquidity support, payments policy, and crisis management. The MoU complements broader multilateral coordination efforts through the Council of Financial Regulators, which also published an updated Charter on the same day. 

APRA proposes streamlined bank licensing framework

On 30 July 2025, APRA released a consultation paper proposing reforms to simplify and accelerate the licensing process for ADIs. The proposed changes include replacing existing guidelines with a more explicit and targeted set of formal licensing criteria, and introducing a 12-month window for applicants to meet those criteria. APRA would then aim to issue a licensing decision within 3 months, with outcomes publicly disclosed. The reforms are intended to provide greater clarity and efficiency for new banking entrants. APRA is also seeking feedback on the future of the Restricted ADI pathway, which has seen limited uptake since its introduction in 2018. The consultation is open until 31 October 2025. 

INSURANCE

APRA consults on minor updates to health insurance enforcement rules

On 14 July 2025, APRA commenced consultation on proposed minor updates to the Private Health Insurance (Health Benefits Fund Enforcement) Rules 2015 (Cth). The rules govern enforcement actions APRA may take in relation to health benefits funds operated by private health insurers. The proposed changes include update to statutory references within the rules, minor corrections, removal of transition arrangement provisions and to address amendments made to the Corporations Act. The changes aim to ensure the rules remain current and legally effective. Submissions can be made until 8 August 2025.

PAYMENTS

Industry consultation launched on future of account-to-account payments

On 2 July 2025, the RBA and the Treasury announced the commencement of a public consultation on the future of Australia’s account-to-account payments system by Australian Payments Network (AusPayNet) and Australian Payments Plus. The consultation follows a key recommendation from the RBA’s recent risk assessment concerning the proposed decommissioning of the Bulk Electronic Clearing System. The consultation seeks stakeholder input to help shape a modernised system aligned with public interest objectives. The RBA has published a supporting paper outlining its public interest framework, emphasising the need for accessible, cost-effective, reliable and secure payment options. The consultation closed on 31 July 2025.

ACCC authorises industry collaboration to wind down cheques

On 2 July 2025, the ACCC issued a final determination authorising AusPayNet and members of the Australian Paper Clearing System to coordinate efforts to phase out the cheques system in Australia. The authorisation permits parties to enter agreements and hold discussions to support the transition with stakeholders - including the RBA, government bodies, and industry participants.

The move aligns with Treasury’s Cheques Transition Plan, which targets cessation of cheque issuance by 30 June 2028 and full system closure by 30 September 2029. The ACCC had previously granted interim authorisation in December 2024 and released a draft determination in May 2025. The authorisation, granted with conditions, remains in effect until 31 December 2030.

Proposed reforms to card payment costs and surcharging

On 15 July 2025, the RBA released a consultation paper outlining major proposed reforms to card payment costs and surcharging. Following public consultation since October 2024, the Payments System Board has formed a preliminary view that surcharging on eftpos, Mastercard and Visa cards should be removed. The RBA estimates consumers currently pay around $1.2 billion annually in surcharges, which are no longer effectively steering payment behaviour.

The consultation paper also proposes lowering interchange fee caps, potentially saving businesses another $1.2 billion per year, with small businesses expected to benefit most. Additional measures include introducing caps on foreign interchange fees and mandating fee transparency from card networks and large acquirers. The consultation closes on 26 August 2025. Final decisions and an implementation timeline are expected by the end of 2025.

ACCC grants interim authorisation for card payment regulations

On 17 July 2025, the ACCC granted interim authorisation to AusPayNet to continue applying key provisions of its Issuers and Acquirers Community Regulations and Code Set. The authorisation covers certification, suspension and termination processes, which have been subject to ACCC oversight since 2000. AusPayNet had applied in April to revoke and replace its existing authorisation (AA1000495-1), which is due to expire on 1 August 2025. The interim authorisation allows continuity of regulatory arrangements while the ACCC assesses the substantive reauthorisation application.

Mobile wallet payments surge past $160 billion

On 24 July 2025, the ABA reported that Australians made over $160 billion in mobile wallet payments in the past year, according to its 2025 Bank on It report. The number of mobile wallet transactions exceeded four billion, more than 11 times the number of ATM withdrawals, highlighting the accelerating shift to digital banking. Since 2019, the value of mobile wallet payments has grown twenty-three-fold, with a 28% increase in the last year alone. Nearly all customer-bank interactions (99.3%) now occur via digital channels, while in-person branch visits have halved over the same period. The report also notes that lending to small and medium enterprises now comprises more than half of all business lending, and agribusiness lending reached a record $131 billion. Despite the digital shift, banks maintain over 3,300 branches and 3,400 Bank@Post outlets to support customers preferring traditional services. 

PRIVACY AND DATA

OAIC sets regulatory priorities for 2025–26

The Office of the Australian Information Commissioner (OAIC) has released its regulatory action priorities for 2025–26, identifying four key focus areas. First, it will target sectors and technologies that create power and information asymmetries, including rental and property markets, credit reporting, data brokerage, advertising technology, and AI applications. Particular attention will be paid to excessive data collection and systemic failures in enabling access to government information. Second, the OAIC will seek to preserve rights in emerging technologies such as facial recognition, biometric scanning, and location tracking, especially where used by government. Third, it aims to strengthen information governance within the Australian Public Service by addressing poor data lifecycle management, use of messaging apps, and inadequate Freedom of Information (FOI) and privacy request handling. Finally, the OAIC will push for timely access to government information, using complaint investigations and performance data to highlight agency non-compliance with FOI obligations.

PRUDENTIAL

New operational risk standard now in force

From 1 July 2025, the new cross-industry Prudential Standard CPS 230 on Operational Risk Management from APRA has come into effect, raising the bar for banks, insurers and superannuation funds. The standard requires regulated entities to identify critical business services, assess their resilience to severe disruptions, and test business continuity plans to identify vulnerabilities. It also mandates stronger oversight of third-party service providers, with entities required to identify and manage risks from material outsourcing arrangements. Regulated entities must now submit a list of their most material service providers to APRA, enabling APRA to monitor systemic concentration risks. While most institutions are expected to comply immediately, smaller and less complex entities have been granted an additional 12 months to meet certain obligations. 

APRA consults on phasing out AT1 capital instruments

On 8 July 2025, APRA released a consultation package proposing to phase out Additional Tier 1 (AT1) capital instruments from the prudential and reporting frameworks for banks. The move follows concerns about the effectiveness of AT1 instruments in absorbing losses, particularly in stress scenarios.

The consultation includes a paper outlining the rationale for the proposed changes, along with draft prudential standards, reporting standards, and prudential practice guides. APRA is seeking feedback on the proposed approach, which would see AT1 instruments removed from the capital framework over a transitional period. Submissions can be made until 5 September 2025.

APRA holds macroprudential policy settings

On 23 July 2025, APRA announced it will maintain current macroprudential policy settings following its latest review of financial conditions and risks. The mortgage serviceability buffer remains at 3 percentage points, and the countercyclical capital buffer stays at its default level of 1% of risk-weighted assets. The decision reflects a mix of easing financial pressures (falling inflation and interest rates) and persistent vulnerabilities, notably high household debt and elevated geopolitical risks. APRA flagged that further rate cuts could spur riskier lending and asset price inflation. To prepare for such scenarios, APRA will begin engaging with regulated entities on operational aspects of credit-based macroprudential tools, including potential limits on high debt-to-income lending and investor or interest-only loans. These measures follow a 2022 update to APRA’s credit risk standard requiring banks to be ready to deploy such tools if needed.

APRA signals regulatory easing for smaller banks amid rising systemic risks

In a speech to the ABA Conference on 24 July 2025, APRA Chair John Lonsdale outlined plans to recalibrate prudential settings for small and medium banks, while warning of intensifying systemic risks. APRA will introduce a three-tiered regulatory framework to better tailor requirements to bank size and complexity, streamline internal ratings-based accreditation, clarify Pillar 2 capital adjustments, and reform the bank licensing process.

These changes follow a Council of Financial Regulators review into competition and regulatory burdens for small and medium-sized banks. However, Mr Lonsdale stressed that easing compliance must not compromise resilience, particularly as cyber, operational, and geopolitical risks escalate.

Recent credential-stuffing attacks on super funds and third-party service outages have prompted APRA to heighten scrutiny of compliance of APRA’s prudential standard on information security, CPS 234, and the new prudential standard on operational risk management, CPS 230. Stress testing showed banks could withstand a severe downturn, but APRA flagged concerns about rising household debt and potential loosening of lending standards. Macroprudential settings remain unchanged, though further interventions are under consideration.

SUPERANNUATION

ASIC warns against high-pressure superannuation switching tactics

On 3 July 2025, ASIC issued an alert to warn consumers about aggressive sales tactics to encourage consumers to switch their superannuation into risky investments. ASIC flagged concerns with cold calls, clickbait advertising, and unrealistic return promises targeting individuals at the start of the financial year - a time when many review their superannuation performance.

ASIC highlighted several red flags, including unsolicited offers of free super “health checks,” promises to locate lost super, and referrals to financial advisers during calls. Many schemes involve limited adviser contact, poor disclosure, and unlicensed individuals. ASIC also noted that while switching super may be beneficial in some cases, decisions should be made cautiously and independently of sales calls. ASIC has launched a consumer awareness campaign to counter these tactics, building on its 2024 cold-calling initiative. Consumers are advised to use official channels, such as the ATO, to locate lost super.

In a keynote address at the FSC Symposium ‘Shaping Advice in a Time of Change’ on 30 July 2025, ASIC Chair Joe Longo warned of widespread misconduct involving the advice of switching superannuation savings into high-risk investment schemes. ASIC investigations have uncovered a pattern of misleading advertising, aggressive sales tactics, and questionable advice leading consumers to switch superannuation into managed investment schemes such as the Shield Master Fund and First Guardian, with over $1 billion invested by more than 11,000 people.

ASIC is examining the roles of financial advisers, lead generators, research houses, superannuation trustees, and platform operators. The regulator has launched enforcement actions, including court proceedings, licence cancellations, and asset preservation orders. It is also reviewing trustee and licensee practices and advocating for law reform, particularly around conflicted remuneration, gatekeeper standards, and data transparency in the managed investment scheme sector. ASIC has doubled its financial advice investigations and is calling for a coordinated industry and regulatory response to restore trust in the superannuation system.

TAXATION

Treasury consults on tax treatment of foreign bail-in bonds

On 10 July 2025, the Treasury released exposure draft legislation clarifying the tax treatment of foreign bail-in bonds. The proposal would allow such instruments to be treated as debt for Australian tax purposes, provided they meet the existing debt instrument test criteria. This would make interest payments on the bonds tax-deductible, aligning their treatment with that of bail-in bonds issued by Australian banks. Bail-in bonds are financial instruments subject to prudential conditions that permit conversion into equity during financial distress. The draft legislation aims to provide certainty for issuers and investors in cross-border capital instruments. The consultation closes on 5 August 2025.

AML/CTF

AML/CTF Rules finalisation set for August 2025

AUSTRAC has confirmed that the second exposure draft of the revised Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) closed for public consultation on 27 June 2025. The regulator is now reviewing submissions and expects to finalise the AML/CTF Rules in August 2025.

The AML/CTF reforms will roll out progressively through the remainder of 2025. Core guidance will be finalised in October 2025 following targeted consultation with industry bodies, while sector-specific guidance for newly regulated entities (including real estate agents, lawyers, and accountants (Tranche 2 Entities), will be finalised by December 2025. Newly regulated entities must enrol as reporting entities from 31 March 2026. AUSTRAC will not accept enrolments before this date. By 1 July 2026, affected businesses are expected to be enrolled, have an AML/CTF program in place, and be ready to report suspicious matters.

AUSTRAC launches AML/CTF education campaign for designated non-financial businesses

On 17 July 2025, AUSTRAC announced an education campaign targeting businesses newly subject to AML/CTF obligations. The initiative is aimed at Tranche 2 entities. Beginning from July 2025, AUSTRAC will host four webinars covering the agency’s role, AML/CTF obligations, financial crime risks, and the use of outsourcing to meet compliance requirements. Supplementary materials such as checklists and fact sheets will also be made available. The campaign is designed to support businesses ahead of THE  reforms expanding the AML/CTF regime to non-financial sectors. Registration for the webinars is open via AUSTRAC’s website.

AUSTRAC updates guidance on alternative identification procedures

On 17 July 2025, AUSTRAC released updated guidance to assist reporting entities in verifying customers who lack standard identification documents. The revised guidance outlines acceptable alternative identification methods for individuals facing barriers such as homelessness, incarceration, domestic violence, or systemic disadvantage. It includes new provisions on financial inclusion, clarifies that alternative ID may be used for customers not considered low ML/TF risk, and permits the use of recently expired documents. Entities must assess and mitigate ML/TF risks when relying on such alternatives, and document procedures to ensure consistency. Examples include referee statements (including via video) and tailored approaches for Aboriginal and Torres Strait Islander customers, gender-diverse individuals, and those affected by natural disasters. The guidance emphasises balancing risk management with accessibility and requires record-keeping of identification processes used.

AUSTRAC sets 2025–26 regulatory priorities ahead of tranche 2 expansion

AUSTRAC has released its regulatory priorities for 2025–26, signalling a shift towards risk-based supervision and sector-wide enforcement. The agency is preparing to regulate approximately 80,000 additional businesses under the AML/CTF regime from July 2026. The focus will move from entity-level compliance checks to assessing systemic risks and behaviours across industries. AUSTRAC will target high-risk areas such as cash-intensive businesses and digital currency exchanges, citing their potential for anonymous and rapid cross-border transfers. Enhanced intelligence capabilities will support identification of sectors failing to manage financial crime risks. 

AUSTRAC expands Fintel Alliance to boost financial crime intelligence

AUSTRAC has announced a major expansion of the Fintel Alliance (Alliance), its public-private partnership aimed at combating financial and serious crime. The move follows recent successes in identifying criminal networks through collaborative data analysis. Established in 2017, the Alliance includes law enforcement agencies, government bodies, and financial institutions.

Key developments include increased AUSTRAC staffing, enhanced data analytics capabilities, and broader industry engagement, particularly with real estate professionals, legal service providers, and accountants. A senior ANZ Bank manager has also been seconded to co-lead efforts to deepen collaboration. The Alliance’s Collaborative Analytics Hub, which recently analysed large cash transaction datasets, will now become a central function.

DISPUTES AND ENFORCEMENT

AFCA receives over 100,000 complaints for second consecutive year

AFCA received 100,745 complaints in 2024–25, marking the second year in a row that complaints have exceeded 100,000. While this represents a 4% decline from the previous year’s record, complaints in general insurance and investment advice rose sharply, offsetting reductions elsewhere. General insurance complaints increased 17% to 34,231, driven largely by add-on insurance issues. Investment and advice complaints rose 18% to 4,193, with a 95% surge in self-managed super fund complaints and a 124% rise in allegations of failure to act in clients’ best interests. High-profile failures, including United Global Capital and Brite Advisors, contributed to the spike. Banking and finance complaints fell 9%, aided by a 45% drop in scam-related cases. Superannuation complaints declined 16%, with improved claim handling cited as a factor. The most complained-about products were transaction accounts, motor vehicle insurance, and credit cards. 

AFCA consults on general insurance claims handling approach

On 28 July 2025, the Australian Financial Complaints Authority (AFCA) opened public consultation on its draft “Approach to General Insurance Claims Handling”. The proposed guidance outlines how AFCA assesses complaints about insurers’ claims handling practices, referencing legal obligations, industry codes, regulatory guidance, and good industry practice. The draft aims to clarify AFCA’s expectations and decision-making processes, promoting consistency and transparency in complaint resolution. It covers a range of claims handling issues, including delays and disputes over assessments or settlements. Submissions can be made until 29 August 2025.

AFCA updates Approach to Responsible Lending

AFCA has revised its Approach to Responsible Lending after a consultation earlier this year. The feedback focused on five key areas: early complaint resolution, consistent application of the Approach, clarification of loss calculation concepts, serviceability assessment guidance, and potential expansion of the Approach’s scope. AFCA has updated several sections of the Approach to clarify how interest is applied to compensation and adjusted debts, and how acquisition, sale, and holding costs factor into consumer losses. It also refined guidance on verifying living expenses and applying interest rate buffers, noting that APRA guidance applies to “residential mortgage loans”.

AFCA issues new guidance on travel insurance complaints

On 30 July 2025, AFCA released a new External Dispute Resolution (EDR) response guide for travel insurance complaints. The guide is intended to assist insurers in preparing comprehensive responses when a complaint is referred back to AFCA after initial review. AFCA expects insurers to adopt the guide from 14 August 2025, including for complaints already awaiting allocation. The guidance applies irrespective of whether the insurer disputes AFCA’s jurisdiction, ensuring that complaints can be progressed efficiently if jurisdiction is later confirmed. The guide outlines the information AFCA considers necessary for resolving travel insurance disputes and aims to streamline the complaint-handling process. 

ASIC launches review of debt management sector

ASIC has commenced a review of the debt management and credit repair sector, citing concerns about potential consumer harm. The surveillance will examine compliance by approximately 100 licensed firms, focusing on business models and practices that may leave financially vulnerable clients worse off. ASIC is investigating allegations including failure to meet contractual obligations, excessive fees for limited services, and poor communication. The review follows enforcement actions against several firms, including Bakken Holdings Pty Ltd, whose credit licence application was refused in June, and Chapter Two Holdings Pty Ltd, which received infringement notices in April for allegedly misleading website claims. ASIC plans to publish findings in a public report in 2026.

APRA receives BUSSQ independent expert report

On 2 July 2025, APRA announced it had received the final independent expert report on BUSS (Queensland) Pty Ltd, trustee for The Building Unions Superannuation Scheme (Queensland) (BUSSQ). The report was commissioned under licence conditions imposed by APRA in August 2024 and later varied in March 2025. BUSSQ was required to appoint an independent expert to assess its fit and proper processes and expenditure management practices. As part of its licence obligations, BUSSQ must now publish the report.

AUSTRAC orders external audit of Western Union

On 3 July 2025, AUSTRAC directed Western Union Financial Services Australia (Western Union) to appoint an external auditor following concerns over its compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). AUSTRAC cited deficiencies in customer due diligence, delayed or missing suspicious matter reports, and non-compliant international funds transfer instruction reporting. AUSTRAC is concerned whether Western Union’s AML/CTF program is functioning effectively. Western Union has reportedly self-disclosed system issues and committed to remediation, but AUSTRAC remains unsatisfied with its compliance performance. The appointed auditor will assess the adequacy of Western Union’s AML/CTF controls and report findings to AUSTRAC, which will then consider whether further regulatory action is warranted.

ASIC appeals Federal Court ruling on HCF Life insurance term

ASIC has lodged an appeal against a Federal Court decision that found a “pre-existing condition” term in insurance contracts of HCF Life Insurance Company Pty Limited (HCF Life) misleading but not unfair. The term, used in several ‘Recover’ range products, allowed HCF Life to deny claims if a medical practitioner later formed the view that signs of a condition existed before the policy commenced - even if undiagnosed and unknown to the consumer.

The Court had ruled in October 2024 that while the term could mislead, it was not unfair, partly due to the protective effect of section 47 of the Insurance Contracts Act 1984 (Cth). ASIC argues that relying on such statutory protections to assess fairness undermines consumer understanding and that a term can be both misleading and unfair. The appeal follows a $750,000 penalty imposed on HCF Life in May 2025 and corrective disclosures issued to affected policyholders.

Federal Court imposes additional $3.5m penalty on ACBF Funeral Plans

On 10 July 2025, the Federal Court ordered a further $3.5 million penalty against ACBF Funeral Plans Pty Ltd (in liquidation) (ACBF), bringing total penalties to $4.7 million. The latest penalty follows ASIC’s successful appeal in February 2024, overturning an earlier decision and finding that ACBF had misrepresented itself as Aboriginal owned or managed.

The Court found the misrepresentation to be deliberate and egregious. ACBF had previously been penalised $1.2 million in September 2023 for falsely claiming that plan holders would receive lump sum payments of their chosen benefit amount, when in fact reimbursements were limited to funeral expenses incurred.

ACBF, a subsidiary of Youpla Group Pty Ltd (Youpla), marketed funeral insurance primarily to Aboriginal consumers. Both entities entered liquidation in 2022. ASIC is not permitted to enforce the penalties without leave of the Court due to ACBF’s liquidation status. Related proceedings against former directors and officers of ACBF and Youpla remain ongoing.

Full Federal Court confirms unlicensed lending by Cigno and BSF

On 10 July 2025, the Full Federal Court dismissed an appeal by Cigno Australia Pty Ltd (Cigno), BSF Solutions Pty Ltd (BSF), and their directors, upholding a May 2024 ruling that they engaged in unlicensed credit activity and charged prohibited fees. The Court found that the companies jointly operated a “No Upfront Charge Loan Model” that circumvented consumer credit laws and imposed substantial fees on borrowers.

Between July and December 2022, over 100,000 consumers received loans totalling $34 million under the model, incurring more than $70 million in fees. The Court confirmed that directors Mark Swanepoel of Cigno and Brenton Harrison of BSF were knowingly involved in the contraventions. The matter will return to the Federal Court for a penalty hearing. The appellants were ordered to pay ASIC’s costs.

ASIC penalises licensees over unregistered advisers

ASIC has issued infringement notices to two AFS licensees, Skye Money Pty Ltd and Smart Financial Capital Pty Ltd, after financial advisers under their authorisation provided personal advice while unregistered. Each licensee paid a penalty of $31,300 in July 2025. The breaches relate to the registration requirement introduced in February 2024 under the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021 (Cth), which mandates that relevant providers must be both authorised and registered with ASIC before giving personal advice to retail clients. Both licensees registered the advisers and reported the breaches upon discovery. ASIC has now issued five infringement notices in 2025 for similar conduct.

ASIC sues Fortnum for cybersecurity risks

On 22 July 2025, ASIC commenced proceedings in the NSW Supreme Court against Fortnum Private Wealth Limited (Fortnum), alleging failures in cybersecurity risk management. The regulator claims Fortnum breached its obligations as an AFS licensee by lacking adequate policies, systems, and controls to address cybersecurity risks. ASIC alleges that prior to revising its cybersecurity policy in May 2023, several authorised representatives (ARs) of Fortnum experienced cyber incidents, including one attack that resulted in the personal data of over 9,000 clients being published on the dark web. The regulator further contends that Fortnum failed to mandate minimum cybersecurity training for ARs, did not adequately supervise ARs’ cybersecurity frameworks, and lacked internal or external cybersecurity expertise. ASIC is seeking declarations and pecuniary penalties against Fortnum.

AUSTRAC ends Enforceable Undertakings

• PayPal: On 22 July 2025, AUSTRAC announced the cancellation of an Enforceable Undertaking (EU) with PayPal Australia Pty Ltd (PayPal), following the completion of a two-year remediation program. The EU, accepted in March 2023, stemmed from a 2020 external audit that identified deficiencies in PayPal’s AML/CTF systems, particularly in the reporting of international funds transfer instructions. PayPal advised AUSTRAC in May 2025 that it had fulfilled the EU’s requirements and implemented additional controls recommended by the auditor. AUSTRAC and the external auditor confirmed that PayPal’s improved its practices in line with the requirements of the EU.

• Perth Mint: AUSTRAC has formally released Gold Corporation, trading as Perth Mint, from an EU imposed in November 2023 following serious breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). The EU was triggered by deficiencies in customer due diligence, transaction monitoring, and reporting obligations. In May 2025, AUSTRAC received a final report from an external auditor confirming the completion of required remediation. The regulator acknowledged improvements in Gold Corporation’s AML/CTF systems and controls, including a commitment to ongoing review. The release from the EU does not diminish AUSTRAC’s expectation that Gold Corporation continues to proactively manage its risk environment.

• NAB: On 25 July 2025, AUSTRAC announced the conclusion of its EU with National Australia Bank Limited (NAB), following confirmation by an independent auditor that NAB had met its obligations under the agreement. The EU, accepted in April 2022, was entered into by NAB and four related entities to address deficiencies in customer identification, ongoing due diligence, and the maintenance of a compliant AML/CTF program. The auditor’s report confirmed NAB’s compliance with the EU and made further recommendations outside its scope, particularly in relation to transaction monitoring and assurance frameworks. NAB has agreed to implement these additional measures. While AUSTRAC acknowledged the progress made, it emphasised that finalising the EU does not equate to an end of the assurance and integration work required by NAB.

Court dismisses ASIC appeal in Finder Wallet case

The Full Court of the Federal Court has dismissed ASIC’s appeal against Finder Wallet (now Wallet Ventures Pty Ltd) (Wallet Ventures) over its crypto product, Finder Earn. ASIC had alleged that Finder Earn constituted a debenture and that Wallet Ventures had breached the Corporations Act by offering it without an AFS licence. The Court upheld the original decision, finding that Finder Earn was not a debenture under the Corporations Act.

$93 million refund in excessive bank fees to low-income customers

Following ASIC’s latest review of bank fees, 21 banks will refund over $93 million to low-income customers who were charged excessive fees on transaction accounts. ASIC’s Report 811 Better and beyond: Expanding better banking outcomes to more low-income Australians, released on 29 July 2025, found that millions of Australians, with many reliant on Centrelink payments, had been kept in high-fee accounts. The refunds include $33 million already paid to 150,000 customers and a further $60 million to be distributed to over 770,000 customers. The review also prompted over one million customers to be moved into low-fee accounts, potentially saving $50 million annually. Banks have responded variably: some expanded refund programs, others improved access to low-fee accounts, and several removed documentation requirements. Six banks have begun collecting data to better serve First Nations customers.

AUSTRAC commences civil penalty proceedings against Mounties

AUSTRAC has initiated civil penalty proceedings in the Federal Court against Mount Pritchard District and Community Club (Mounties), alleging serious and systemic breaches of AML/CTF laws. AUSTRAC claims Mounties provided gaming services without maintaining a compliant AML/CTF program, failing to implement adequate risk assessments, staff training, transaction monitoring, and enhanced customer due diligence. Mounties, which operates 10 venues and approximately 1,400 poker machines, is accused of outsourcing key compliance functions to third-party provider Betsafe without sufficient oversight. AUSTRAC also alleges Mounties failed to monitor high-risk customers appropriately, despite the cash-intensive nature of its operations.

ASIC warns against Bitget’s unlicensed crypto futures

ASIC has issued a public warning to Australian investors about unlicensed crypto asset futures products offered by BTG Technology Holdings Limited and related entities (Bitget). Bitget does not hold an AFS licence and is therefore not authorised to promote or offer financial products to Australian investors. The products, marketed as “crypto futures trading” via Bitget’s website and app, are high-risk derivatives that allow speculation on crypto asset price movements. ASIC noted that these products are being offered with leverage of up to 125:1, well above the 2:1 cap imposed on licensed providers for retail clients. Although Bitget is registered with AUSTRAC for digital currency exchange services, it is not licensed to provide financial services in Australia.