Financial Services, Funds and Superannuation legal update - August 2026

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

The new financial year has brought with it a number of regulatory reforms, government consultations and the implementation of Tranche 2 AML/CTF laws and regulations impacting on thousands of Australian businesses. Guidance announcements have also been made by AUSTRAC setting out its interpretation of the regulatory requirements.

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

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

Parliamentary Joint Committee provides feedback on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026

The Parliamentary Joint Committee on Intelligence and Security provided a report (the Advisory Report) outlining recommended amendments to the proposed Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026 (the Bill). The Advisory Report outlines key recommendations, including:

• the Bill be amended so that new power relating to high-risk is exercised by the responsible Minister on advice from the AUSTRAC CEO (after a 30-day consultation period), not solely by the AUSTRAC CEO alone, thereby strengthening accountability
• the Minister, in consultation with AUSTRAC, considers the merits of restricting or prohibiting cryptocurrency ATMs as a matter of priority, citing concerns around the potential for scams or financial crime
• that AUSTRAC and the RBA consider money-laundering risks associated with the Bulk Electronic Clearing System, and
• that the Bill or its Explanatory Memorandum be amended to clarify the scope of application of the Professional Services in Table 6 and updating the ‘pass on’ wording in the proposed transfer of value provisions.

The Committee also recommended greater transparency in consultation and that the Bill’s commencement be delayed until 1 July 2027, extending the timeframe for compliance.

Advisory Report on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026

Fintel Alliance uncovers coordinated mortgage fraud across major lenders

AUSTRAC and other members of the Fintel Alliance have carried out analysis of data from 10 major Australian banks and identified potentially hundreds of millions of dollars in suspected fraudulent loans, mostly linked to properties in Sydney. AUSTRAC stated the data indicated suspected mortgage fraud involving inflated incomes, misrepresented employment and fabricated or unverifiable business activity used to support loan applications. AUSTRAC has issued alerts to industry to be aware of such practices and is working with banks to identify practical controls that lenders can use to prevent, detect and disrupt mortgage fraud.

Fintel Alliance uncovers coordinated mortgage fraud across major lenders | AUSTRAC

AUSTRAC issues notices to non-enrolled businesses

AUSTRAC has started issuing section 167 notices to businesses that have not enrolled under recently reformed AML/CTF laws.

Entities issued with a notice include real estate agents, accountants, lawyers and jewellers which AUSTRAC believes may be within scope of the reformed regime from 1 July. Those entities are now required to provide AUSTRAC with information to determine whether they provided designated services within the Act’s scope, for AUSTRAC to determine whether they are meeting their regulatory obligations. AUSTRAC’s CEO has emphasised the importance that businesses providing designated services are enrolled with AUSTRAC and their critical role in identifying financial crime.

AUSTRAC issues notices to non-enrolled businesses | AUSTRAC

AUSTRAC strengthen Pacific capability to combat money laundering and organised crime

AUSTRAC is working to strengthen the ability to identify and strengthen money laundering detection and disruption in the pacific region by introducing training initiatives in Papua New Guinea and the Solomon Islands.

As part of the initiative, AUSTRAC developed the International Financial Intelligence Training program and delivered it in Papua New Guinea between 3 and 6 August. The program was delivered as part of support to Papua New Guinea under the Bilateral Security Agreement. It also delivered a training session in the Solomon Islands to 12 financial intelligence units as part of a cryptocurrency tracing and intelligence course.

AUSTRAC strengthens Pacific capability to combat money laundering and organised crime | AUSTRAC

AUSTRAC releases its regulatory priorities for 2026-27

AUSTRAC has released its regulatory priorities for the 2026-27 period, which broadly focus on ensuring businesses in regulated sectors maintain effective ML/TF risk management programs. To assist, AUSTRAC will refine its guidance, education and starter kits in accordance with their engagement with businesses and industry bodies. Regulatory intervention will focus on entities regulated before 31 March that AUSTRAC considers do not manage their risks effectively, and reporting entities in the newly regulated sectors who have not yet enrolled. AUSTRAC will be aiming to take a more targeted approach with respect to:

• suspicious matter reports given their crucial role in identifying potentially illegal activity and preventing the flow of illicit funds
• virtual asset service reports given that the virtual asset space is one of growing risk
• developing regional partnerships by collaborating with the Pacific Financial Intelligence Community and Pacific Supervisors Forum, and
• exploring options to improve productivity of the AML/CTF regime.

Our regulatory priorities for 2026-27 | AUSTRAC

Superannuation

APRA releases 2026 superannuation performance test and product insights

APRA has completed its annual test assessing the long-term performance of superannuation products and aimed at improving member outcomes and transparency. Five hundred and forty seven (547) superannuation products were assessed, of which 12 products spread across 6 trustees did not pass the test.  APRA found that the failures were largely driven by poorer investment performance rather than increased administration fees and costs. APRA had also released its 2026 Comprehensive Product Performance Package (CPPP) which combined its test results with investment returns and fees. The CPPP notably shows that administration fees continued to decline across products while platform Trustee-Directed Products (TDPs) remain more expensive with higher rates of underperformance in comparison to other product types over 10 years. We note that there continues to be concern expressed as to how the performance test is cast, its scope and efficacy - see for example:

Strengthening the Superannuation Performance Test | SMC Australia

Treasury Consultation: Strengthening the superannuation performance test

APRA releases 2026 superannuation performance test and product insights | APRA

Government releases Protecting Consumers and the Promise of Superannuation Reforms

The Government has proposed a large suite of amendments with the intention of strengthening protections across the superannuation, advice and investment ecosystem in the wake of the Shield Master Fund and First Guardian Master Fund collapses. The amendments fall into 6 broad categories addressing:

1. Protections for Members of APRA-Regulated Superannuation Funds: These proposed reforms will create an obligation on trustees to set and ensure compliance with caps on advice fee deductions, increase maximum civil penalties available under the SIS Act, provide APRA the power to set risk based capital requirement based on the risk of investment options and providing ASIC with the power to direct trustees to commence remediation when an investment option fails.
2. Protections in the Self-Managed Superannuation Fund (SMSF) Sector: These proposed reforms include mandatory trustee education prior to SMSF registration requiring unique SMSF bank accounts, requiring SMSFs have a written strategy, and empowering the ATO to prevent rollovers to new SMSFs in situations where the ATO is investigating fraud or other harm.
3. Reforms to address harmful Lead Generation: These reforms include banning unlicensed real time contact, and amending anti-hawking protections by limiting the existing exemption for financial advisers.
4. Enhancing Managed Investment Scheme Governance: These proposed reforms include providing the AASB with the power to make mandatory audit and assurance standards for auditors of Managed Investment Scheme (MIS) compliance plans and requiring Responsible Entities (REs) to notify ASIC when they freeze or limit an investor’s ability to make redemption.
5. Financial Advice Amendments: These proposed reforms include proceeding with previously proposed advice reforms, changes to intra-fund charging, targeted superannuation prompts, and statements of advice. The reforms also propose to add a new class of adviser model for superannuation and life insurance entities, simplify the best interest duty, and reform educational requirements for professional advisers.
6. Compensation Scheme of Last Resort (CSLR): These reforms include limiting CSLR payments to actual losses for applications made to AFCA after 30 June 2027 and providing a more predictable framework for funding exceptional losses via the waterfall special levy mechanism, including a waterfall for SMSFs.

At this stage, we only have these broad principles available, and it will be interesting to see the proposed legislation which emerges; as there will need to be extensive amendments to existing provisions.

Protecting Consumers and the Promise of Superannuation in an Evolving Financial Ecosystem | Treasury.gov.au

General Regulatory

ASIC and APRA both release 2026-27 Corporate Plans

On 20 August 2026, APRA released its 2026-27 Corporate Plan, outlining three key strategic priorities:

1. Maintaining the safety and stability of Australia’s financial systems.
2. 'Getting the balance right' so that those objectives are delivered without undue industry costs.
3. Improving their own organisational effectiveness.

APRA’s supervision priorities include resilience to AI-enabled cyber threats and a renewed focus on quantum computing risk, concentrated reliance on common technology platforms and material service providers, more intensive supervision where geopolitical risk gaps persist, and new system-risk stress tests.

On policy, APRA will finalise its governance package for banks, insurers and superannuation funds expected to commence early 2028, and will consult jointly with ASIC on FAR changes to cut administrative burdens.

Correspondingly, on 26 August 2026, ASIC released its 2026-2027 Corporate Plan. This plan is framed around the Regulator making itself easier to deal with for entities trying to comply and hard to avoid for those causing harm.

ASIC’s consumer protection works target scams, debt collection, buy now pay later services, superannuation advice fee deductions with specific regard to general insurance, and new work on insurance claims intermediaries in disaster-affected communities. ASIC plans to renew its focus on artificial intelligence (AI), covering the banking industry’s use of AI in customer facing services, effects on consumers and investors, and AI-driven manipulation, deepfakes and misinformation as a market integrity risk.

ASIC’s burden reduction commitments include simpler guidance and instruments, more efficient licensing, closer coordination with other regulators on data collection, and broadly mirror APRA’s corresponding plan outlined above.

APRA Corporate Plan 2026-27 | ASIC Corporate Plan 2026–27

Foreign investment framework reforms – Review of ineffective conditions

Treasury has invited investors and other stakeholders to provide feedback on conditions to foreign investment approvals that may be ineffective, provide duplicative regulatory requirements or are due to be modernised. The reviews come off a push to ensure conditions to foreign investment are effective at mitigating risk to Australian national interest and security, while also effective and fit for purpose. It follows the 2026-27 budget announcement of a foreign investment reforms package. For more information or to provide your response, follow the link below.

Foreign investment framework reforms – Review of ineffective conditions - Consult hub

APRA and ASIC warn frontier AI awareness must turn to action

APRA and ASIC have urged entities in the financial market to take action against frontier AI risks.

To build on their messages, nine roundtables were hosted by ASIC and APRA which aimed to help the industry navigate the evolving risk environment with the key issues being, the importance of cyber fundamentals, incident response timeframes, defensive AI, dependency and concentration risks and industry wide collaboration.

ASIC’s Commissioner had emphasised the urgency of the growing risk that threat actors were using frontier AI models to target vulnerabilities. APRA’s Deputy Chair had also emphasised the encouraging signs amongst advanced entities that were willing to share insights with less mature entities.

APRA and ASIC warn frontier AI awareness must turn to action | APRA

ASIC enforcement outcomes

Federal Court declares contraventions in relation to First Guardian

The Federal Court has made declarations that the superannuation platform and service provider Netwealth has contravened the Corporations Act in relation to the First Guardian Master Fund. ASIC commenced proceedings after accepting a court enforceable undertaking requiring it to compensate affected members 100% of the amounts they invested in First Guardian, less any amounts withdrawn. ASIC did not seek a pecuniary penalty in the matter, owing to the particular circumstances of the case, including the timely payment of compensation to affected members. 

Netwealth contravened Corporations Act | Federal Court

Major Australian bank admits to breaching its BEAR obligations in relation to cyber incident

A major Australian bank has conceded to historical breaches of its customer authentication controls, cyber-security testing and executive accountability obligations under the Banking Executive Accountability Regime (BEAR), the predecessor to the Financial Accountability Regime (FAR). The concession follows a cyberattack in 2023 involving its licensee business, during which an unidentified threat actor gained access to approximately 257 customer accounts and made 286 unauthorised transactions. Of the $490,000 in unauthorised transactions, only $140,000 was recovered however the Bank fully reimbursed all affected customers. Despite this remediation, APRA has stated its clear expectation that the Bank was on notice of the cyber-security failures which it should have addressed prior to the incident.

On 10 August 2026, APRA commenced civil penalty proceedings against the Bank in the Federal Court. The Bank has formally admitted to breaching various BEAR obligations including CPS234 – Information Security and orders have been proposed such that the Bank pay a pecuniary penalty of $8 million for those contraventions.

Bank admits to breaching its BEAR obligations in relation to cyber incident | APRA

APRA, ASIC invite opinions on proposed changes to the Financial Accountability Regime Regulator Rules

 APRA and ASIC have released a consultation paper for feedback relating to streamlining the Financial Accountability Regulation Rules which will inform final changes to the Regulator Rules and Information Paper, planned for release in late 2026 and effective from early 2027.

Consultation is open until 2 October 2026 on the following proposals:

• the removal of an accountable persons’ key functions as prescribed information in the register, and
• that APRA and ASIC no longer expect accountability maps to include an accountable person’s reporting line. 

The above proposed changes are available in the consultation documents below:

draft revised Financial Accountability Regime (Information for register) Regulator Rules 2024

draft revised Financial Accountability Regime Information Paper.

These changes are said to aim to reduce regulatory burden for entities while maintaining clear accountability standards.

For more details on how to provide submissions in reply to the consultation, follow the link below.

Consultation Paper invites opinions on streamlining FAR administration | APRA, ASIC

Government releases Consultation Paper to strengthen privacy laws

The Government is currently seeking submissions to modernise Australian privacy laws in light of emerging risks posed by new technology, including artificial intelligence and wearable devices such as smart glasses. This is a measure towards improving the Exposure Draft Bill designed to better protect Australians while also promoting innovation and enhancing certainty for regulated entities.

Consultation is open until 18 September 2026 and proposes:

• A fair and reasonable test to qualify companies’ collection of information, as well as restrict collection to purposes Australians expect.;
• A right to erasure – allow individuals to request the destruction of personal information from large digital platforms.
• Stronger, more meaningful standards of consent that allow people to make an informed choice on their terms.
• Measures preventing businesses from trading in Australians’ personal information without permission.

For more details on how to provide submissions in reply to the consultation, follow the link below.

Consultation Paper invites opinions on privacy laws | Attorney-General’s Department

ASIC issues three superannuation fund trustees with infringement notices for allegedly misleading investment disclosures

Six infringement notices have been issued to the trustees of three superannuation funds after ASIC identified allegedly false or misleading representations about their superannuation investment options during a review of disclosures on superannuation trustees’ websites. The infringement notices, collectively totalling $118,800, have either been paid, or agreed to be paid by the relevant trustees. Payment of an ASIC infringement notice is not an admission of guilt or liability.

26-212MR Three super funds issued infringement notices for misleading investment disclosures | ASIC

ESG, Climate Disclosures and Carbon Credits

The Supreme Court of New South Wales has ordered Fiducian Investment Management Services (FIMS) to pay a $7.3 million penalty over operation of its ESG fund

The Supreme Court of NSW has ordered that FIMS pay a penalty of $7.3 million for breach of its duty to act with care and diligence.

The penalty arises from findings by the Court that FIMS breached its duty of care and diligence in its capacity as responsible entity for Diversified Social Aspirations Fund (Fund) and made misleading statements on the Fund’s ethical and socially responsible investment objectives.

Notably, the Fund’s PDS had been issued 6 times between October 2019 and May 2024, and indicated that it would “aim to be positive for society and for the environment and aim to avoid investments in harmful activities”. The PDS also identified various industries or activities it would avoid investing in. However, the underlying funds Fiducian invested in held investments in companies that derived revenue from fossil fuels.  This Fund has now closed.

The Court found that the Fund did not have reasonable grounds to make the ESG statements .

26-191MR Court orders Fiducian Investment Management Services to pay $7.3 million penalty over operation of ESG fund | ASIC

Treasury opens consultation on improving climate-related finance disclosures

The Government is currently seeking submissions to better inform regulatory reform by Treasury in relation to climate-related financial disclosure (CFD) framework. The consultation relates to mandatory CFDs that commenced in January 2025 and required entities, some of the largest to report on risks and opportunities in the climate space, while preparing annual sustainability reports.

Consultation is open until 2 October 2026 and, along with making CFD process more efficient while maintaining high-quality reports from relevant businesses, the paper consists of three main proposals (along with various options) to achieve the objects, they include:

• modifying assurance rules with a view to minimising compliance costs;
• updating guidance materials to ensure greater consistency when applying reporting requirements; and
• pursuing mechanisms to facilitate better consistency regarding value-chain information requests.

For more details on how to provide submissions in reply to the consultation, follow the link below.

Consultation Paper invites opinions on adjusting assurance settings | Treasury

Government proposed amendments to Carbon Credit Legislation

On 29 August, the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026 (Cth) was introduced in parliament. As drafted, the Bill allows for the Minister declare a method superseded, as such those projects will have to find another method or stop earning Australian Carbon Credit Units (ACCUs). Existing projects and methods will be covered retrospectively.

The Bill strengthens protections for native title groups, as those groups with a registered native title claim, and not just determined native title, now must consent twice: both before a project is registered, and again when it goes ahead on their land. 

Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026 – Parliament of Australia | Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill Consultation - Department of Climate Change, Energy, Environment and Water

ASIC launches sustainability reporting video series

In partnership with the Australian Accounting Standards Board (AASB) and University of Technology Sydney (UTS), APRA has released a series of sustainability reporting videos. These videos and their associated materials aim to help reporting entities their obligations under the mandatory climate-related sustainability reporting regime contained within the Corporations Act 2001 (Cth) and ASIC RG 280 Sustainability reporting.

ASIC launches sustainability reporting video series | ASIC