Financial Services, Fund and Superannuation legal update - July 2025

Welcome to this month’s Financial Services legal update, your guide to the key regulatory developments, enforcement actions and emerging legal trends shaping Australia’s financial services landscape.

This month’s developments highlight the ongoing efforts among Australia’s financial regulators to reinforce system stability, improve consumer protections, and address emerging risks.

AUSTRAC has focused on expanding its anti-money laundering and counter-terrorism financing regime, particularly through upcoming Tranche 2 reforms, which will bring real estate agents, lawyers and accountants under its regulatory scope by July 2026.  Existing reporting entitles are also preparing for legislative updates that will take effect in March 2026.

ASIC has been active in modernising its regulatory guidance, particularly around conflicts of interest and industry codes of conduct.  It is currently reviewing the debt management sector for compliance and consumer harm, and consulting on reforms to digital financial product disclosures.  Enforcement actions have continued including bans and investigations into advisers who are not acting in the best interests of their clients.

Meanwhile, APRA’s regulatory changes aim to strengthen financial stability, simplify compliance for banks, and support competition, especially among smaller institutions. By streamlining licensing and phasing out less effective capital instruments, APRA is making the framework more transparent and resilient while maintaining current macroprudential policy settings to safeguard against financial risks.

We hope you enjoy this edition and if you have any questions, please do not hesitate to contact a member of our team.

Superannuation

CPS 230 now in effect

APRA Prudential Standard CPS 230: Operational Risk Management has officially commenced. Despite the commencement date passing on 1 July 2025, prudentially regulated entities are reminded that the work is not over. Pre-existing contractual arrangements must be uplifted to comply with the service provider provisions of CPS 230 from the earlier of the renewal date of the agreement or 1 July 2026.

APRA’s new prudential standard on operational risk management comes into force

Funds

ASIC consulting on relief instrument for managed investment products

ASIC is consulting on proposed changes to remake the ASIC Corporations (Managed Investment Product Consideration) Instrument 2015/847, which governs how responsible entities of registered managed investment schemes (pre-1 October 2013) determine pricing for scheme interests. The instrument outlines how consideration is calculated and how discretion may be exercised. Proposed amendments aim to simplify documentation of discretionary pricing decisions, reduce prescriptive elements, and align the instrument with ASIC’s modern drafting style. Consultation closes on 29 August 2025.

ASIC proposes to remake relief instrument for managed investment product consideration

General regulatory

Treasury opens consultation on sustainable investment product labelling

Treasury has released its consultation paper on sustainable investment product labelling, part of its Sustainable Finance Roadmap targeted for implementation in 2027. The proposed labelling regime is intended to complement existing and forthcoming reforms including climate-related financial disclosures, the Australian Sustainable Finance Taxonomy, net zero transition planning guidance, and enhanced enforcement against greenwashing.

Although no draft legislation has been released, Treasury is consulting on: (a) the level and nature of evidence that should underpin a sustainable product label; (b) when a product should be required to carry a sustainable investment label; and (c) whether common ESG investment approaches should be formally codified in legislation or left to industry discretion. Australia’s relatively late adoption of a regime offers an opportunity to learn from international approaches.

Sustainable investment product labels

ASIC Consultation

ASIC is consulting on the following changes to regulatory guides:

• ASIC consults on update to Regulatory Guide 183 Approval of financial services sector codes of conduct: ASIC has released an updated version of Regulatory Guide 183 Approval of financial services sector codes of conduct. The proposed updates intend to amend the regulatory guide to comply with the legislative changes to the industry codes of conduct regime introduced by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020. The consultation closes on Monday 1 September 2025.
• ASIC consults on update to Regulatory Guide 181 Licensing: Managing conflicts of interest: ASIC has released an updated version of Regulatory Guide 181 Licensing: Managing conflicts of interest. The updated guidance sets out how AFS licensees should comply with their conflicts management obligation.  It explains how the law applies, the types of conflicts they need to identify and manage, the need to have robust and tailored arrangements and how licensees can effectively manage conflicts.
• ASIC consults on options for regulation of employee redundancy funds: ASIC has released Consultation Paper 384 Employee redundancy funds (CP 384) to seek feedback on the future regulatory requirements for employee redundancy funds under the Corporations Act 2001 (Corporations Act), ahead of the expiry of transitional relief on 1 April 2026.  These funds currently benefit from exemptions related to licensing and management investment provisions.  Given their growing scale and operational complexity, ASIC is reconsidering this relief. CP 384 seeks feedback on changes to the definition of ‘employee redundancy funds’ and outlines three regulatory options: (1) full compliance with the Corporations Act, (2) targeted relief from specific obligations, or (3) renewal of existing relief with added conditions.  ASIC will announce its final approach by late 2025. The consultation period has now closed.

ASIC proposes updates to guidance for industry codes of conduct

ASIC seeks feedback on proposed updates to conflicts management guidance

ASIC invites feedback on options for regulation of employee redundancy funds

Further relief for reportable situations regime

ASIC has eased reporting obligations for financial services and credit licensees following industry feedback. Under the new relief, a breach is not reportable if it:

• involves only one situation or related group
• relates solely to a civil penalty or misleading conduct provision
• does not involve client money or settlement rules
• impacts no more than 10 clients
• is rectified within 60 days, and
• results in losses under $1,000.

The timeframe for determining whether a breach is reportable has been extended from 30 to 60 days. Reports will be considered as lodged with ASIC if they are lodged with APRA and meet information requirements set out in the relief. However, there is no equivalent relief from APRA’s own reporting obligations for the same conduct.

ASIC gives further relief for licensees under the reportable situations regime

ASIC probes debt management and credit repair services

ASIC will launch a targeted review of 100 licensees in the debt management and credit repair sector, focusing on whether firms are complying with legal obligations and acting in consumers’ best interests. The review will examine instances where firms may have failed consumers to meet the terms of their agreement, charged excessive fees, for minimal or no services, or failed to communicate effectively with clients.

ASIC probes debt management and credit repair services

Anti-Money Laundering/Counter Terrorism Finance (AML/CTF)

AUSTRAC sets regulatory expectations under AML/CTF reforms

AUSTRAC CEO Brendan Thomas has outlined expectations, for upcoming AML/CTF Act reforms. From 31 March 2026, current reporting entities must embed reform-related changes and uplift existing programs.  From 1 July 2026, for Tranche 2 entities—including legal, accounting professions and real estate professionals—will be newly regulated. AUSTRAC expects these businesses to enrol, implement AML compliant programs, appoint a Compliance Officer, train staff, conduct client checks, and report suspicious activity.  The focus is on meaningful, risk-based compliance, not box ticking.

AUSTRAC regulatory expectations for the implementation of the AML/CTF reforms

AUSTRAC 2025-26 regulatory priorities

AUSTRAC has released its regulatory focus for 2025–26, prioritising preparation for regulating Tranche 2 industries and addressing risk gaps in high-risk sectors such as cash and digital currencies.

AUSTRAC unveils 2025-26 priorities to crack down on financial crime

Updated guidance to assist customers who don’t have standard forms of identification

AUSTRAC has released updated guidance to help organisations support customers who may not have standard forms of identification. The update allows for the use of recently expired ID, continued use of alternative ID for customers facing systemic barriers (such as long-term homelessness) and the use of referee statements submitted through channels like video.

Updated guidance to assist customers who don’t have standard forms of identification

Crypto ATM providers to meet minimum conditions

AUSTRAC has placed conditions on cryptocurrency ATM providers to attempt to reduce their exposure to ML/TF risks. These conditions include:

• limits of $5,000 on cash deposits and withdrawals at crypto ATMs
• enhanced customer due diligence controls, and
• mandatory scam warnings.

These conditions are a result of the internal AUSTRAC cryptocurrency taskforce established by AUSTRAC in December 2024.

Crypto ATM providers to meet minimum standards

ASIC enforcement outcomes

Banning orders issued by ASIC

ASIC has made the following banning orders:

• ASIC has issued two permanent banning orders against NSW insurance broker, Jason Prasad, following convictions for dishonestly obtaining a financial advantage by deception.
• ASIC has banned Ian Wailes Potter from providing financial services for five years for his conduct while he was a financial adviser and nominated supervisor of a provisional relevant provider at Superannuation Advice Australia Pty Ltd. ASIC found that the financial advice was not in the clients’ best interests.
• ASIC has made an order permanently banning former credit representative Emmanuel Adu from engaging in credit activities as on two separate occasions he altered Australian Federal Police certificates to remove his previous criminal history.
• ASIC has banned former financial advisers of MWL Financial Services Pty Ltd Rocco D’Amelio for seven years and Robert Crossing for six years. ASIC found they gave advice that was not in the best interests of certain clients, as they recommended these clients invest most of their superannuation into the High Growth class or the Growth class of the Shield Master Fund.
• ASIC has made two orders permanently banning Matthew Allen Beresford from engaging in financial services and credit activities. Mr Beresford used a false identity and fraudulent bank accounts to establish a business and falsely claimed the relevant company representatives held an AFS License.

ASIC permanently bans former insurance broker Jason Prasad

ASIC bans Ian Potter of Superannuation Advice Australia for 5 years for failure to supervise provisional relevant provider

ASIC permanently bans former credit representative Emmanuel Adu

ASIC bans a further two financial advisers of MWL Financial Services

ASIC permanently bans Matthew Beresford from engaging in financial services and credit activities

Licence cancelled by ASIC

ASIC has cancelled the following licenses:

• ASIC has cancelled the Australian Credit Licence of Sydney-based credit provider Lendflex Holdings Pty Ltd after ASIC became aware that Lendflex had failed to lodge its 2024 annual compliance certificate and to nominate Key Person for its ACL.
• Between 24 March and 11 July 2025, ASIC cancelled seven AFS licensees and one credit licensee, due to a failure to hold AFCA membership, including Capital House Pty Ltd, David Anthony Ross, Glove Finance Pty Ltd, JTan Pty Ltd, M&H Pty Ltd, Oz Finance Professional Pty Ltd, Peppermint Loans Pty Ltd and Sheree Nicole Becker.

ASIC cancels Australian credit licence of Lendflex

ASIC cancels seven Australian credit licences and suspends one Australian credit licence

ASIC appeals recent UCT findings

In October 2024, the Federal Court found that a clause in HCF Life’s products about pre-existing conditions was not an unfair contract term, even though it could mislead customers. ASIC is appealing on the grounds that unfair contract terms might be considered acceptable simply because legislation exists to address them—legislation that reasonable consumers may not be aware of.  Additionally, the appeal challenges the notion that misleading terms can be deemed fair.  The outcome of this appeal could set a precedent for how the unfair contract terms regime is applied in future.

ASIC appeals Federal Court findings relating to alleged unfair term used in insurance contracts by HCF Life

ASIC sues Fortnum Private Wealth for allegedly failing to adequately manage cybersecurity risks

ASIC has initiated proceedings against financial advice business Fortnum Private Wealth Limited for alleging failing to manage and mitigate cybersecurity risks, including multiple data breaches affecting nearly 10,000 clients.  ASIC alleges Fortnum lacked sufficient systems, controls, and oversight, breaching its legal obligations as an AFS licensee.

ASIC sues Fortnum Private Wealth for allegedly failing to adequately manage cybersecurity risks

Full Court of the Federal Court has dismissed ASIC’s appeal in Finder Wallet matter

The Full Court of the Federal Court has dismissed ASIC’s appeal in the Finder Wallet case relating to a crypto-asset related product Finder Earn. The ruling upheld the original decision of the Federal Court, which found that the Finder Earn product was not a debenture and therefore Finder Wallet (now Wallet Ventures Pty Ltd) had not breached the Corporations Act, as alleged by ASIC.  ASIC has stated that it is 'carefully considering the decision and its implications'.

ASIC’s appeal against Finder Wallet Decision dismissed

Full Federal Court dismisses Cigno Australia and BSF Solutions appeal

The Full Federal Court unanimously dismissed an appeal by Cigno Australia Pty Ltd, BSF Solutions Pty Ltd, and their respective directors, upholding the 24 May 2024 ruling, which found that had operated without holding an Australian Credit Licence and charged unlawful fees to consumers. The Court also found that directors Mark Swanepoel and Brenton Harrison were involved in the breaches, and agreed the companies jointly developed and implemented a shared business model for mutual benefit.

ASIC successfully defends Cigno Australia and BSF Solutions’ Full Federal Court appeal

Financial advice

AFS licensees penalised for unregistered financial advisers

Infringement notices were issued by ASIC to two AFS licensees, Sky Money Pty Ltd and Smart Financial Capital Pty Ltd, as it had reasonable grounds to believe that the licensees had authorised financial advisers who provided personal advice despite being unregistered. Following the infringement notices, the licensees immediately registered the financial advisers and reported the breach to ASIC.

ASIC pursues licensees after financial advisers gave advice while unregistered

Banking and Authorised Deposit Taking Institutions (ADIs)

ASIC release report on banking outcomes for low-income Australians

ASIC releases Report 811: Better and beyond: Expanding better banking outcomes to more low-income Australians, which assessed the impact of bank fees on low-income customers. The report focused on reducing the impact of dishonour, overdraw, and account-keeping fees (fee harm) and improving access to low-fee or no-fee bank accounts. Participating banks refunded a total of $93 million to low-income customers. ASIC recommended that banks improve processes to easily migrate low-income clients to low-fee products, remediate all low-income customers charged inappropriate fees, and simplify access to low-fee accounts.

Banks to put more than $93 million back in the pockets of low-income customers after charging excessive fees

APRA regulatory updates regarding ADIs

APRA has made the following regulatory updates regarding ADIs:

• APRA’s plans to support small and medium‑sized banks: APRA is actively supporting the Council of Financial Regulators’ (CFR) review into competition among small and medium-sized bank. APRA is exploring measures to reduce regulatory complexity and make the prudential framework more proportional to the size and risk profile of smaller institutions.
• APRA proposes a simpler, more efficient bank licensing framework: APRA has proposed a revamped licensing framework to make the process clearer, faster, and more supportive of new entrants. It suggests formalised criteria, clearer expectations, and a commitment to provide a licensing decision in a timely manner. Applicants would have 12 months from submitting their application to demonstrate they meet APRA’s new licensing criteria. Following this period, APRA would target a licensing decision within three months, with all decisions made public.
• APRA consults on phasing out AT1 capital instruments: APRA has initiated consultations on a proposed phase-out of Additional Tier 1 (AT1) capital instruments. The consultation includes a package of draft prudential and reporting standards and practice guides to transition banks away from AT1 to more stable capital forms. APRA aims to finalise these changes by the end of 2025.
• APRA updates on macroprudential settings: APRA has decided to maintain its current macroprudential policy settings following its latest review. It confirmed that the mortgage serviceability buffer will remain at 3 percentage points and the countercyclical capital buffer at its default level of 1 per cent of risk-weighted assets.

APRA’s plans to support small and medium-sized banks

APRA proposes changes to create a simpler and more efficient bank licensing framework

APRA consults on amendments to phase out AT1 Capital

APRA announces update on macroprudential settings

You can also view our fortnightly (Re)Insurance and Regulation focus blog here.