(Re)Insurance and Regulation Focus - fortnight commencing 10 November 2025
11 November 2025
Key developments in the last fortnight
APRA to consult on CPS 230 amendments for non-traditional service providers
APRA plans to consult on targeted changes to CPS 230 Operational Risk Management (CPS 230) by the end of 2025. The proposed consultation is in recognition of industry feedback that there have been difficulties in complying with CPS 230’s contractual obligations for arrangements with non-traditional service providers (NTSPs), which are normally market-mandated such as stock exchanges, payment schemes or clearing and settlement facilities. APRA regulated entities often have informal arrangements with NTSPs, leading to challenges in complying with the CPS 230 standards. Therefore, APRA intends to propose changes to CPS 230 to clarify its expectations for arrangements with NTSPs, especially around contract uplift and service level monitoring, and to alleviate regulatory burden for regulated entities. APRA aims to finalise the targeted changes by 1 July 2026.
APRA to consult on targeted changes to CPS 230 for non-traditional service providers
ASIC guidance on digital assets updated ahead of major law reforms
ASIC has released its updated Information Sheet 225 (INFO 225), marking another milestone in the development of financial services law for digital assets. The updated guidance sets out in detail how the existing financial services regime applies to digital assets. Under the updated guidance, stablecoins, wrapped tokens, tokenised securities and digital asset wallets are among the digital asset products that ASIC considers to be financial products, meaning that providers of those products must obtain a financial services licence, which ensures consumers enjoy the benefit of key legal protections. ASIC has granted sector-wide ‘no-action’ relief giving the industry time to comply by 30 June 2026. According to ASIC Commissioner Alan Kirkland, ‘ASIC’s guidance provides the regulatory clarity that firms have been calling for to innovate confidently in Australia.’
Updated ASIC guidance supports digital asset innovation and boosts investor protection
ASIC infringement notices penalising misleading statements on sustainability
ASIC has issued infringement notices to the trustee for the HESTA superfund (HESTA) and the trustee of the Prime Super Superannuation Fund (Prime Super), alleging misleading statements on sustainability. HESTA is alleged to have stated in paid advertisements its commitment to remove all investment in carbon emissions by 2025, while in reality it aims to achieve net zero carbon emissions across its investment portfolio by 2050. These statements are alleged to be overstating its ambition to reducing investment in carbon emissions. In Prime Super’s case, ASIC alleged it made misleading statements about the fund’s investments in the annual report that manufacturers of tobacco products were excluded entirely from the fund, when that was not the case. These actions follow ASIC’s previous greenwashing-related civil penalty proceedings and infringement notices to other licensees in response to concerns about alleged greenwashing, as scrutiny against greenwashing continues to be a priority for ASIC.
HESTA pays ASIC infringement notices alleging misleading statements about carbon emissions
Prime Super pays ASIC infringement notice alleging misleading statements about tobacco investments
AFCA concerned over insufficient action on complaints numbers
AFCA have called on the general insurance industry to improve ‘insufficient’ progress in reducing complaint numbers, despite a slight 1% fall to 26,364 complaints in the year to 30 June 2025. In the September quarter alone, 8,827 disputes were lodged — with claims handling delays making up nearly a quarter of all cases. Other key issues included claim denials, disputes over claim amounts, and misleading information provided to customers. AFCA noted that 42% of complaints were resolved early, indicating (from its perspective) that many could have been addressed before escalation. The lead Ombudsman for insurance, Emma Curtis, expressed AFCA’s frustrations at a member forum stating, ‘Our objective is clear. AFCA expects a material reduction in complaints, particularly those about claim delays, and we urge the industry to take effective action.’ These findings highlight the need for stronger focus on claims processes, staff capability, and early resolution to build consumer trust.
Action on complaint numbers remains ‘insufficient’
ICA blames increasing compliance cost on increasing premiums
In its new report, the Cost of Regulatory Burden, the Insurance Council of Australia (ICA) flags the burden of regulatory compliance on the insurance industry as costing $2.5–$3.5 billion annually, representing approximately 4–6% of gross written premium. More than 25 federal, state and territory regulators enforce over 300 instruments, creating at least 30,000 discrete obligations, which is a complexity that the ICA warns is ultimately borne by consumers. CEO Andrew Hall said, ‘It’s important that we ensure the cost of regulation … which is ultimately borne by consumers – is proportionate to the problems we’re attempting to solve.’ The report highlights that 66% of the regulations are prescriptive (dictating how insurers must comply rather than what outcomes are expected), which can stifle innovation and lock customers into inflexible processes. The message is clear from the ICA: effective regulation is essential, but we need better regulation, not just more regulation.
Key dates
- 11 November 2025 – Treasury’s consultation closes on Terrorism and Cyclone Insurance Act 2003 (Cth) review.
- 12-13 November 2025 – ASIC Annual Forum 2025.
- 15 December 2025 – ASIC’s consultation closes on the Life Insurance Code of Practice review.
- 30 January 2026 – AFCA’s consultation closes on targeted adjustments to the general insurance reinsurance framework.
In case you missed it
The Sparke team have been conducting whistleblower and FAR scenario testing for a number of clients. Please reach out if this is of interest to you!
