Financial Services, Funds and Superannuation legal update - December 2025
16 December 2025
Welcome to the December Financial Services Legal Update, your guide to the key regulatory developments, enforcement actions and emerging legal trends shaping Australia’s financial sector. This edition is our final Financial Services, Funds and Superannuation legal update for the year. Thank you for your continued engagement and positive feedback. We look forward to sharing more insights with you in the new year.
December saw continued regulatory activity across governance, markets, and enforcement. ASIC released a number of updated Regulatory Guides related to advertising, product disclosure statements and industry codes. ASIC has also published its long awaited approach to licensing of employee entitlement schemes. APRA is consulting on changes to CPS 230, a three-tier framework for banks, and has released its first market risk outlook. AUSTRAC delayed the publication of its industry specific AML Guidance until mid-January causing some concern for Tranche 1 entities with AML obligations commencing 31 March 2026.
Given it is the end of the year we are also providing you with a summary of things you should look forward to in 2026.
What to look forward to in 2026
2026 will be another year of substantial regulatory change in the financial services sector. We have highlighted a number of key developments to be aware of in 2026:
1. Anti-money laundering reforms
Reforms to the AML/CTF regime will begin to apply from 31 March 2026 for current reporting entities, with changes to AML/CTF program obligations, value transfer requirements and the replacement of ‘designated business groups’ with new ‘reporting groups’ all coming into effect. From 1 July 2026, the regime will extend to ‘Tranche 2’ entities including legal, accounting and real estate sectors. The changes to the AML/CTF regime will significantly increase the regulated population of AUSTRAC, who will be releasing further guidance for different sectors in the new year.
2. Mandatory merger notification regime
Australia’s merger laws will move to a new mandatory merger control regime from 1 January 2026, replacing the existing purely voluntary model. Transactions meeting specified monetary thresholds will need to be notified to the ACCC from 1 January 2026, which will assess whether they are likely to substantially lessen competition before completion. There were some final minute proposals to limit the control exemptions that apply under the new regime which have been delayed until April.
3. Payments System Modernisation and licensing of payment service providers
The Payments System Modernisation amendments will continue into 2026, while the already passed legislation will come into effect. The Treasury Laws Amendment (Payments System Modernisation) Act 2025 and Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Act 2025 passed both houses of parliament and will come into effect in December 2025. The Acts update the Payment Systems (Regulation) Act 1998 to extend to things like digital wallets, stablecoins, crypto payment providers, and similar services under more consistent oversight. Updated regulations will come into effect in 2026. In parallel, the draft Treasury Laws (Payments System Modernisation amendment of the Corporations Act 2001) Amendment Bill 2025 is being developed to establish a core licensing regime for payment service providers. These reforms will be closely watched by funds and platforms that rely on third-party payment providers.
4. ASIC’s review of RG 97 – fees and costs disclosure
ASIC is continuing its targeted review of RG 97 (Disclosing fees and costs in PDSs and periodic statements), including the treatment of stamp duty and portfolio-holdings disclosure for superannuation funds and managed funds. Those consultations will feed into RG 97 changes expected to progress during 2026.
5. Sustainable Investment Product Labels
Treasury’s Sustainable Investment Product Labels project will undergo further consultation. Following the initial consultation in 2025 on a labelling and anti-greenwashing framework for retail investment products, a second consultation is expected in the first half of 2026, refining policy options and implementation details.
6. Mandatory climate-related financial disclosures
Obligations under the new mandatory climate-related financial disclosure regime began in 2025. However, ‘Group 1’ entities whose first climate reports (for periods starting on or after 1 January 2025) will be lodged and reviewed. ASIC has indicated it will run a dedicated program to review sustainability reports from 2026 and will provide further capability-building and guidance in the first half of the year. For ‘Group 2’ entities obligations will begin in July 2026. As more reports are published entities will get a better idea of the different approaches taken by different entities to design of the reporting, approaches to metrics, targets, risk management and governance strategies adopted by other reporting entities.
7. APRA’s governance review
APRA will continue its broad review of governance requirements across the prudential framework, with proposals to update and strengthen: CPS 510 and SPS 510 (Governance), CPS 520 and SPS 520 (Fit and Proper), and SPS 521 (Conflicts of Interest). The review is aimed at ensuring these standards remain contemporary and fit-for-purpose, in the light of recent findings on board oversight, conflicts, and failures in claims and operational management. Superannuation trustees and other APRA-regulated entities should expect more explicit expectations around board accountability, documented decision-making, conflict-management frameworks and the competence and independence of key responsible persons, with revised standards likely to be finalised during 2026 and transition periods to follow.
8. Digital assets
The Corporations Amendment (Digital Assets Framework) Bill 2025 was introduced to parliament on 26 November 2025, and currently at its second reading, seeks to further regulate digital asset providers by introducing two new types of financial products: ‘digital asset platforms’ and ‘tokenised custody platforms’. Once passed this will mean that digital asset platforms and tokenised custody platforms will now need to hold an AFS License and will be subject to the obligations that flow from that.
Regulatory Initiatives Grid | Treasury.gov.au
Derivatives
Amended summary – Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025
The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025 (the Act) received royal assent on 4 December 2025. The Act advances a broad reform package the centrepiece of which is a substantial modernisation of the beneficial-ownership disclosure regime for listed entities, introduced through significant amendments to Chapters 6 and 6C of the Corporations Act. This Act expands the substantial holding regime so that any exposure created by equity derivatives must be disclosed once the 5% threshold is met. Disclosure includes deemed economic interests where the holder receives, in substance, the financial benefits of owning the underlying shares. Purely cash-settled equity derivatives generate a deemed economic interest requiring disclosure and ASIC will prescribe calculation methods for quantifying these exposures. The Act also introduces changes to the ACNC secrecy framework, lengthens the review cycle for the Financial Regulator Assessment Authority, and implements a series of minor, machinery and technical amendments across Treasury portfolio legislation.
General regulatory
APRA consults on targeted changes to CPS 230 for non-traditional service providers
APRA has opened a consultation on targeted amendments to CPS 230 that would adjust how regulated entities manage arrangements with non-traditional service providers (NTSPs), such as payment schemes, clearing and settlement facilities, and stock exchanges. Under the proposed changes, obligations under CPS 230 related to maintaining formal written agreements containing certain clauses, ensuring entities can make an orderly exit, and monitoring compliance and perform of agreements will not apply to NTSPs. Key risk-management, continuity planning and ongoing monitoring obligations will remain unaffected. It is proposed these changes will apply to NTSPs where the arrangement with the APRA-regulated entity utilises a standardised contract or is not subject to a formal agreement. APRA plans to finalise the amendments ahead of the 1 July 2026 compliance date and is inviting submissions until 30 January 2026.
Consultation on targeted amendments to CPS 230 Operational Risk Management | APRA
ASIC announces regulation of employee redundancy funds
ASIC has confirmed that, once current relief ends on 1 April 2026, operators of employee redundancy and long-service leave funds (known as ‘employee entitlement schemes’) will be required to hold an Australian Financial Services (AFS) licence and comply with certain managed-investment provisions of the Corporations Act 2001. The decision follows consultation under CP 384, with stakeholder support favouring the adopted approach. To ease the transition, fund operators have until 1 September 2026 to submit licence applications; in the interim (from 1 April 2026 until ASIC’s decision) a relief regime will remain in place subject to conditions. ASIC indicates further guidance on transitional and post-licensing requirements will be published in early 2026.
ASIC announces approach to regulation of employee redundancy funds | ASIC
ASIC updates guidance on Product Disclosure Statements
ASIC has released an updated version of Regulatory Guide 168, consolidating multiple withdrawn guides into a single framework and clarifying issuer obligations when preparing Product Disclosure Statements. The updates reflect feedback received through CS 22, with amendments including relevant PDS guidance from Information Sheet 155 Shorter PDSs, and updated guidance on when enforcement action may arise for defective PDSs. ASIC has also updated Appendix 1 to clarify how s1013DA sustainability-related disclosures interact with wider anti-greenwashing expectations including new guidance for what type of methodology and policy should be disclosed.
ASIC updates guidance on Product Disclosure Statements | ASIC
ASIC finalises new digital asset exemptions
On 9 December 2025, ASIC announced a new package of class relief measures designed to support Australia’s digital-asset and payment sectors. Intermediaries engaging in the secondary distribution of certain stablecoins and wrapped tokens will be exempt from the requirement to hold separate Australian Financial Services (AFS), market, or clearing and settlement facility licences where those tokens qualify as ‘eligible’ under the relief.
ASIC finalises new exemptions to support digital asset innovation | ASIC
ASIC issues catalogue of key legal obligations for private credit funds
On 9 December 2025, ASIC released a new catalogue summarising the core legal obligations and regulatory guidance that apply to operators of private credit funds in Australia. ASIC has also indicated its intent to refresh regulatory guidance during 2026–2027, informed by ongoing surveillance of private credit funds. ASIC has reminded private credit fund operators they must meet general AFS licensee obligations (RG 104, RG 105 and RG 166), maintain effective risk-management systems (RG 259 and Section B of RG 132), appropriately manage conflicts of interest (RG 181), ensure fee and disclosure transparency consistent with misleading-conduct prohibitions (RG 170), apply sound valuation practices, and comply with advertising and marketing requirements under s912A(1)(c) and RG 234.
ASIC finalises new exemptions to support digital asset innovation | ASIC
ASIC publishes updated IDR data-reporting handbook
ASIC has issued a revised IDR data-reporting handbook to reflect changes in reporting requirements, including updated product and issue codes and clarifications on how complaint data must be recorded and submitted. Financial firms must now ensure all internal dispute resolution (IDR) complaints are recorded using the new product/issue numbers and submitted via the ASIC Regulatory Portal in machine-readable format. IDR reporting is unchanged for the upcoming January to February 2026 submission window, which covers complaints open or received between 1 July and 31 December 2025. The updated handbook provides a refreshed data dictionary, glossary, submission checklist and validation rules. Significantly discretionary risk mutuals will now have their own code and will not be required to check insurance being the only category which has been available to them. We are pleased to report that this change followed by submissions made on behalf of the mutuals represented by Sparke Helmore on this issue.
ASIC publishes updated IDR data reporting handbook | ASIC
ASIC updates guidance on industry codes of conduct
ASIC has released an updated version of Regulatory Guide 183 (RG 183), providing refreshed guidance on industry codes of conduct for the financial services and credit sectors. The revised guide reflects legislative reforms since 2013, clarifies ASIC’s role and the criteria and process for code approval, and streamlines the guidance to enhance clarity and usability. Under the updated framework, codes remain voluntary and existing codes do not need ASIC’s approval. However, when an industry or sector does seek ASIC approval under s 1101A of the Corporations Act 2001 (or s 238A of the National Consumer Credit Protection Act 2009), RG 183 sets out the threshold and evaluative criteria ASIC will apply.
ASIC issues updated guidance for industry codes of conduct | ASIC
ASIC proposes updates to advertising guidance for financial products and services
ASIC has released proposed amendments to Regulatory Guide 234 advertising guidance for financial products, services and credit. The draft consolidates outdated content, simplifies the structure of the guide and incorporates material from RG 53 The use of past performance in promotional material, which ASIC proposes to withdraw. The revisions also reflect enforcement activity since 2012, with new and updated examples addressing misleading claims about returns, risks, fees, past performance and the use of forecasts. ASIC has also refreshed the guidance for media platforms, updated definitions and legislative references, and relocated good-practice tables and related materials into new appendices.
ASIC proposes updates to guidance on advertising financial products and services | ASIC
Superannuation
ASIC calls for feedback on stamp duty & portfolio-holdings disclosure for super funds
ASIC has opened a consultation inviting the superannuation and investment-management sectors to provide feedback on proposed changes to stamp duty and portfolio-holdings disclosure requirements for super funds. Under the proposals, stamp duty would no longer be disclosed annually as a transaction cost. Instead, stamp duty would be averaged over seven years when reported in fees and costs summaries. ASIC also proposes providing class-order relief to allow trustees to require superannuation trustees to disclose only the total value and portfolio weighting for internally managed assets.
Regulators release 2025 Retirement Income Covenant ‘Pulse Check’ Report
ASIC and APRA have released the 2025 Pulse Check report assessing superannuation trustees’ progress in implementing the Retirement Income Covenant. The report highlights continued variability in trustee performance, noting that while some funds have materially advanced their retirement-income strategies, many have made only limited improvements over the past year. The agencies report that key gaps remain in member segmentation, targeted guidance, product development and the measurement of retirement outcomes.
Industry update: 2025 Pulse Check on retirement income covenant implementation | APRA
ASIC extends disclosure and reporting relief for Superannuation Trustees
ASIC has extended transitional relief for super funds from certain disclosure and reporting obligations, allowing trustees additional time to comply with updated standards for disclosure and reporting requirements. Under the Superannuation Industry (Supervision) Act 1993 data reported under a reporting standard must be calculated in the same way in other documents such as PDSs.
ASIC extends disclosure and reporting relief for super trustees | ASIC
APRA releases System Risk Outlook and New Financial System Risk Report
APRA has published its inaugural System Risk Outlook alongside a detailed report on emerging financial-system risks, providing a consolidated view of key vulnerabilities across banking, insurance and superannuation. The reports highlight elevated focus on geopolitical risk and macroeconomic uncertainty, ongoing pressure from high household indebtedness and rising property prices, and a growing share of higher-risk housing lending as the most material domestic risks. APRA also points to increasing interconnectedness between financial sectors, amplifying the potential for stress in one area to transmit more broadly.
System Risk Outlook - November 2025 | APRA
Enforcement
ASIC interim stop order FXCM
ASIC has issued an interim stop order preventing FXCM from issuing contracts for difference (CFDs) to retail clients and from onboarding any new retail clients. The stop order was triggered because ASIC found that FXCM’s Target Market Determination (TMD) incorrectly included investors with a ‘medium risk appetite’. ASIC considered ‘medium risk appetite’ clients as unsuited to the high-risk nature of CFD
25-295MR ASIC issues DDO stop order against FXCM for TMD deficiencies | ASIC
ASIC issues interim DDO stop order against City Finance Lending
ASIC has issued an interim stop order preventing City Finance Lending from issuing its small-amount credit contract product to retail clients, citing alleged deficiencies in City Finance Lending ’s target market determination (TMD). ASIC found that the TMD allegedly failed to properly define acceptable sources of income, delineate which customers should be excluded on the basis of repayment capacity, or specify appropriate distribution conditions to ensure the product only reaches suitable clients.
25-284MR ASIC issues DDO stop order against City Finance Lending Pty Ltd | ASIC
APRA imposes additional licence conditions on Australian Ethical Superannuation
APRA has imposed additional licence conditions on AES, the trustee of the Australian Ethical Retail Superannuation Fund, following a review of its expenditure and related-party arrangements. APRA alleges that AES had not demonstrated sufficiently robust processes to justify fees paid to its parent company under investment management agreements and raised concerns about whether those fees were consistent with members’ best financial interests.
APRA imposes additional licence conditions on Australian Ethical Superannuation | APRA
Authorised deposit taking institutions (ADI)
APRA consults on new three-tier prudential framework for banks
APRA has released a discussion paper proposing a shift from its existing two-tier classification of banks to a three-tiered prudential framework based on size, complexity and risk. This proposed new structure introduces a top-tier of ‘Most Significant Financial Institutions’ (MSFIs) for banks with more than AUD 300 billion in assets which would be the four major banks and Macquarie Bank. The second tier would cover all other banks that meet a raised threshold for ‘Significant Financial Institutions’ (SFIs), while the third tier would consist of smaller, non-SFI banks.
APRA finalises phase-out of Additional Tier 1 capital instruments
APRA has finalised changes to the banking capital framework that will remove Additional Tier 1 (AT1) instruments from the list of eligible regulatory capital. From 1 January 2027, banks will no longer be able to count AT1 towards meeting minimum capital requirements, and all existing AT1 instruments are expected to be phased out by 2032.
APRA finalises changes to phase out Additional Tier 1 capital instruments | APRA
APRA imposes limit on high debt-to-income home loans to curb riskier lending
APRA has announced that from 1 February 2026, banks and authorised deposit-taking institutions (ADIs) will be required to cap ‘high debt-to-income’ (DTI) home loans so that no more than 20 per cent of their new residential mortgages exceed a DTI ratio of six times income. This limit will apply separately to owner-occupier and investor loans and represents the first formal instance of a binding DTI cap on Australian home lending. Under the policy, some loans will be exempt from the cap, including bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings, to avoid disrupting new housing supply and property-market transactions.
APRA to limit high debt-to-income home loans to constrain riskier lending | APRA
