(Re)Insurance and Regulation Focus - fortnight commencing 19 January 2026
20 January 2026
Key developments in the last fortnight
APRA consults on amendments to CPS 230
APRA has launched a targeted consultation on proposed amendments to Prudential Standard CPS 230 Operational Risk Management to better support regulated entities’ engagements with 'non-traditional service providers'. The proposal aims to exempt certain material arrangements with non-traditional service providers from selected contractual and service level obligations whilst retaining core risk management requirements. This initiative reflects ongoing regulatory innovation to balance operational risk resilience with practical implementation challenges for industry participants. Submissions on the proposal closes 30 January 2026, with the amendments expected to be finalised before 1 July 2026.
Consultation on targeted amendments to CPS 230 Operational Risk Management
ASIC updates guidance on digital disclosures
ASIC has released updated guidance on digital financial services disclosures, refining Regulatory Guide 221 Facilitating digital financial services disclosures to reflect industry feedback from its recent consultation. The update clarifies how AFS licensees can deliver disclosures through digital channels while still meeting obligations under Parts 7.7 and 9.9 of the Corporations Act. ASIC has removed outdated content, clarified expectations around accessibility and timing, and reinforced the need for disclosures to be clear, prominent and easy for consumers to engage with. The changes reflect ASIC’s continued focus on balancing innovation and digitalisation with strong consumer protections.
ASIC issues updated guidance on digital disclosures
CSLR levy confirmation draws criticism from industry
Industry groups have criticised the confirmed Compensation Scheme of Last Resort (CSLR) levy, calling aspects of the scheme structurally flawed and potentially costly for financial services firms. Critics argue that design elements are creating disproportionate costs that may ultimately be passed through to consumers and could grow over time without urgent reform. There is broad support for a quick consultation on options to improve the scheme’s sustainability before further levy adjustments are considered. This debate highlights ongoing tensions between consumer protection objectives and industry cost sharing mechanisms.
‘Structurally flawed scheme’: industry hits out as CSLR levy confirmed
Financial services company settles lawsuit relating to commission and advisory practices
A large financial services company has agreed in principle to settle a class action for $29 million relating to historical legacy insurance commissions and advisory practices dating back to 2014–2021. The Federal Court proceeding alleged that aligned advisers steered clients toward in-house life insurance products on unfavourable terms, raising questions about fiduciary and statutory duties. While the financial services company has not admitted liability, the settlement marks another significant step in resolving legacy issues from past distribution frameworks and remuneration structures. For industry professionals, this underscores the long-term legal and reputational risks of advice models and remuneration incentives that are not consumer centric by design.
FS advisor slammed by $29m class action over legacy insurance commissions
CGC releases annual report for 2024-25
The General Insurance Code Governance Committee have released their latest annual report highlighting ongoing industry performance under the General Insurance Code of Practice (Code), including key compliance and breach trends. Reported data shows improvements in certain areas of Code compliance, with reductions in self-reported breaches and progress on complaints and claims handling, while persistent challenges remain. These insights reinforce the importance of robust governance, transparency, and continuous improvement in insurer practices to meet the standards set by the Code and consumer expectations. The report serves as a valuable benchmark for stakeholders committed to elevating industry conduct and customer outcomes.
Federal Court orders $925,000 in penalties against RM Capital and SMSF Club for conflicted remuneration breaches
The Federal Court has ordered RM Capital Pty Ltd and its authorised representative The SMSF Club Pty Ltd to pay a combined $925,000 in penalties for failing to prevent and for accepting conflicted remuneration, respectively. These penalty proceedings follow findings in February of 2024 that SMSF Club received referral fees in breach of the Corporations Act and that RM Capital did not take reasonable steps to ensure compliance. The Court noted that RM Capital’s 'lack of systems and a culture of compliance made it almost inevitable that reasonable steps would not be taken' and that this approach, in conjunction with the period of contravention, warranted the high penalties. ASIC Deputy Chair Sarah Court noted this outcome underscores the importance of robust oversight and consumer protection in the financial advice industry.
ASIC guidance on managing conflicts of interest renewed
ASIC has released its updated Regulatory Guide 181 AFS Licensing: Managing Conflicts of Interest (RG 181) on managing conflicts of interest for AFS licensees. The key enhancements to RG 181 include clarifications as to how the law applies to conflicts of interest, identifying the types of conflicts that AFS licensees should identify and manage, ASIC’s expectations around robust and tailored arrangements to manage conflicts, and practical steps to implement effective conflict controls. The update also includes a non-exhaustive catalogue of related legal obligations to assist AFS licensees to better understand their responsibilities. In releasing the updated guidance, ASIC has emphasised the real risk that conflicts of interest pose to consumer trust and the risk of lasting harm to industry and consumers.
ASIC renews guidance on managing conflicts of interest in financial services
Former CEO sues bank over $13.5 million bonus
The former CEO of one of the big four banks has filed a lawsuit over its decision to strip him and other executives of short and long-term incentives in light of the bank’s widespread compliance failures which resulted in $240 million in fines from a number of ASIC proceedings. In defence of its decision, the bank pointed to APRA prudential standard CPS 511 requiring executive remuneration to be linked to performance and risk outcomes. The bank has indicated that its decision follows considered and deliberate assessment of executive remuneration outcomes and that it would defend its position. AFS licensees should pay close attention to this case noting the difficulties of determining executive remuneration outcomes in light of CPS 511 and the Financial Accountability Regime.
Former chief executive Shayne Elliott sues banking giant after losing $13.5m in bonuses
Updates to accounting standards supporting mandatory climate reporting
On 15 December 2025, the Australian Accounting Standards Board approved key amendments to the AASB S2 Climate-related Disclosures, aligning local requirements with recent updates to the IFRS S2 Sustainability Disclosure Standard and easing reporting burdens for Australian entities. Group 1 entities preparing their first climate-related financial disclosures will benefit from reduced duplication and clearer Scope 3 emissions guidance, particularly in financial services sectors. The amendments, which apply for annual periods beginning on or after 1 January 2027 and allow for early adoption, also introduce flexibility on measurement methods and industry classification systems to improve comparability and compliance. These changes represent a meaningful step forward in climate-related financial disclosure practices in Australia, supporting better transparency and streamlined reporting.
Key dates
- 23 January 2026 – ASIC’s consultation closes on the proposal to remake relief instruments for financial reporting by foreign AFS licensees and overseas banks.
- 30 January 2026 – APRA’s consultation closes on proposed amendments to CPS 230.
- 30 January 2026 – Treasury’s consultation closes on class exemptions from the deferred sales model regime.
- 9 February 2026 – ASIC’s consultation closes on proposed updates to guidance on financial reporting and audit relief in RG 43.
In case you missed it
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