(Re)Insurance and Regulation Focus - fortnight commencing 13 October 2025
14 October 2025
Key developments in the last fortnight
APRA’s first disqualifications of accountable persons under FAR
APRA has disqualified two former accountable persons of Xinja Bank (in liq) in its first enforcement action taken under the Financial Accountability Regime (FAR). The disqualified accountable persons (one of whom was the CEO and the other was a non-executive director) were disqualified from being or acting as accountable persons of any ADI under FAR for 8 years and 10 years respectively, for their failures to comply with their accountability obligations. APRA found that the two failed to act properly and with due skill, care and diligence in raising capital for Xinja Bank and falsely reporting to APRA that the capital was CET1 capital when it was not. They both failed to take reasonable steps to prevent matters arising that would adversely affect the prudential standing of the bank. And further, in the case of the CEO, he did not deal with APRA in an open, constructive and cooperative way in responding to document requests by APRA’s external investigator, and in the case of the non-executive director, failing to act with honesty and integrity. The disqualifications demonstrate APRA’s readiness to impose serious consequences on accountable persons who fail to comply with their accountability obligations and serve as important precedent for the FAR compliance. Also in relation to FAR, the Federal Court has provided important guidance on the concept of 'reasonable steps' in a decision published last week regarding the inadequacy of cyber security arrangements in place at Australian Clinical Labs. While the case was decided in relation to the reasonable steps obligations under the Privacy Act, we think the approach is indicative of how future courts will consider reasonable steps obligations in analogous legislative regimes, such as FAR.
APRA disqualifies two directors of Xinja Bank under Financial Accountability Regime
Australian Information Commissioner v Australian Clinical Labs Limited (No 2) [2025] FCA 1224
Government reviews reinsurance pools for cyclone and terrorism risks
The Australian government has commenced a statutory review of the Terrorism and Cyclone Insurance Act 2003 (Cth) with the goal to evaluate whether the terrorism and cyclone reinsurance pools are effective in achieving their policy objectives and to consider whether the governance and operational frameworks are suitable moving forward. These pools are operated by the Australian Reinsurance Pool Corporation (ARPC) and are intended to lower reinsurance costs for insurers and thereby to reduce premiums for policyholders in high-risk areas. Treasury has released a consultation paper, seeking input from stakeholders to assist its review on these pools’ effectiveness through examining the adequacy of governance, administration and resources supporting the pools. This review reflects the Government’s commitment to ensure that the pools remain effective in supporting insurance affordability and risk management for communities and businesses exposed to cyclone and terrorism risks in Australia.
2025 review of the Terrorism and Cyclone Insurance Act 2003
ASIC has taken its fourth greenwashing action
Following the previous greenwashing civil penalty actions against Mercer Superannuation, Vanguard Investment Australia and Active Super, ASIC has brought a fourth greenwashing action against Fiducian Investment Management Services Limited (FIMSL), a responsible entity of an environmental, social and governance (ESG) fund. This is also ASIC’s first action against a responsible entity for alleged governance and compliance failures with responsible entity duties. ASIC alleges FIMSL failed to act with care and diligence as the responsible entity of the fund and engaged in misleading and deceptive conduct relating to its description of how the fund works in the PDS (e.g. failure to identify ESG related risks). ASIC considers that FIMSL’s fund governance provides a clear example of bad practice, stating that the bar for governance standards that underpin ESG representations for investment products is high and it will continue to hold entities accountable that have failed to meet those standards.
ASIC’s annual report reveals enforcement actions and investigations on the rise
According to ASIC's annual report for FY24-25, it has increased enforcement activities and commenced extensive works to address regulatory complexity and strengthen Australia’s capital markets. Through investing in ASIC’s operational capabilities, including technologies and data analytics, ASIC has been successful in delivering 'a 50% increase in investigations, an almost 20% increase in new civil enforcement proceedings and the completion of 829 targeted surveillances'. ASIC has also been working to simplify the way regulated entities deal with it and has achieved significant outcomes including launching the Regulatory Simplification Consultative Group, reviewing the use of AI by financial services and credit licensees and taking down 6,900 investment scam and phishing websites, among other major enforcement actions.
APRA publishes 2024-25 annual report
APRA has published its Annual Report for FY24-25 which details how APRA has fulfilled its core purpose of maintaining the safety and stability of APRA-regulated financial institutions for the benefit of the Australian community. The report recognises the current industry-specific challenges and risks such as international economic disruption and cyber security incidents, emphasising the importance of prioritising resilience and maintaining robust systems and controls to mitigate risks. APRA states that it will continue working towards strengthening board governance, risk management and accountability across regulated entities in the banking, insurance and superannuation sectors and will exercise its powers to achieve the right balance in supervision and regulation.
APRA publishes 2024-25 Annual Report
Cbus admits liability for delays in processing death benefits
In November 2024, ASIC brought proceedings against super fund Cbus alleging that it was taking more than 90 days to process death benefit and insurance claims for the families of members. ASIC also alleged Cbus failed to act “honestly, fairly and efficiently” when handling claims and found 6,000 claims had delays in payments for more than a year. Cbus has admitted liability for the long delays in the processing of $20 million in death and disability claims, and it has issued an apology to members and claimants acknowledging the distress caused to them by the delays. Cbus is yet to face its penalty hearing.
Cbus admits liability in ASIC death benefit case, faces penalty hearing
ASIC urges lenders to improve hardship support
ASIC has released its Report 815 Hardship, not so hard to get help, finding ongoing concerns about hardship practices while acknowledging some improvements by lenders. Following ASIC’s report in 2024 highlighting poor hardship practices, ASIC required each lender that received tailored feedback to respond with an action plan outlining their proposed improvements. While ASIC has seen an uplift in hardship practices, such as the increased customer awareness of the hardship support and the flexibility in information collection, ASIC is concerned about the overall quality of lenders’ hardship responses. ASIC urges lenders to continue improving hardship support for customers in financial distress and will continue to monitor lenders’ progress, in light of the enforcement actions against NAB and ANZ for hardship processes failure earlier this year.
ASIC urges ongoing customer focus following welcome improvements in hardship support
ASIC bans former insurance broker for eight years
ASIC has banned Mr Munther El-Alami for a period of eight years from providing any financial services, controlling an entity that carries on a financial services business, and performing any function involved in the carrying on of a financial services business. Mr El-Alami was an authorised representative of Alternative Media and employed by a firm called Advizer. ASIC found that Mr El-Alami engaged in misleading or deceptive conduct by making misleading or false representations when submitting applications for life insurance policies on behalf of customers, in breach of financial services law. ASIC also found it had reason to believe that Mr El-Alami was not a fit and proper person, not competent to participate in the Australian financial services industry and was likely to contravene financial services laws.
ASIC bans former insurance broker Munther El-Alami for eight years
IAG penalised by NZ court for pricing breaches
Across the ditch, IAG New Zealand has been fined NZ$19.5 million by the High Court in Auckland for pricing failures that affected around 269,000 customers, following civil proceedings initiated in April by the Financial Markets Authority (FMA) (which is the NZ equivalent of ASIC). IAG, the largest insurer in New Zealand, was found to have breached financial conduct laws by failing to correctly price premiums and apply discounts. The FMA considers that IAG underinvested in its systems and processes leading to widespread failures to the detriment of its customers. The NZ High Court ordered this significant penalty to IAG considering the nature and scale of IAG’s contraventions (so far the largest in among all fair dealing cases brought by the FMA), which sends a reminder to the NZ financial market of the importance of investing in robust systems and making good on the promises made to customers (which mirrors ASIC’s objectives and objectives, unsurprisingly).
NZ court hits IAG with ‘significant’ penalty for pricing breaches
Key dates
- 9-10 October 2025 – Insurance Council of Australia’s 2025 Annual Conference.
- 16 October 2025 – AILA National Conference, Melbourne (see AILA website for details)
- 15 October 2025 – ASIC consultation closes on initiatives to simplify ASIC’s regulations and further proposals.
- 11 November 2025 – Treasury’s consultation closes on Terrorism and Cyclone Insurance Act 2003 review.
In case you missed it
The Sparke team have been conducting whistleblower and FAR scenario testing for a number of our clients – feel free to reach out if this is of interest to you!
