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Key developments in the last fortnight

Block Earner appeal backflip

The Full Federal Court has overturned the Federal Court’s original decision that the Earner product provided by Block Earner was a financial product. The proceedings also involved ASIC’s unsuccessful appeal to overturn the Federal Court’s previous decision to relieve Block Earner from liability to pay a penalty for the provision of unlicensed financial services. The Full Federal Court found that the Earner product was not a managed investment scheme, derivative or financial investment on the basis that the returns offered by the product were contractually obliged fixed returns. The Court’s decision significantly narrows the scope of when fixed-yield crypto offerings might be considered financial products but left open the possibility that they be characterised as credit products. ASIC has stated that they are considering the decision.

Full Federal Court finds Block Earner did not engage in unlicensed conduct

ICA pushes for greater transparency of broker remuneration

An independent review of the National Insurance Brokers Association of Australia’s Insurance Brokers Code of Practice (Codeis underway and the Insurance Council of Australia (ICA) has taken the opportunity to call for greater remuneration transparency. The ICA recommends considering more pay and commission transparency and proposes that the Code be updated to reflect the new commission consent regime, which commences from 10 July 2025. This includes more fulsome disclosure of all forms of remuneration and benefits, beyond standard commission rates, to enable consumers to understand the potential impacts on the price that they pay. The ICA has also called for the Code to be amended to align with the higher standards and additional obligations imposed on insurers under the ICA’s General Insurance Code of Practice.

Insurers urge brokers to raise transparency in code update

The Climate Council unveils analysis on property climate risk in Australia

An analysis conducted by Climate Valuation and The Climate Council estimates that about 4.4% of the national property base are already considered high risk, with a further 10.4% being moderate risk, from the effects of climate change, including flooding, bushfires, severe wind and costal erosion. The findings are based on an analysis of 15 million properties spread over 15,000 suburbs and over 150 federal electorates. These increasing risks have led to the ICA to renew calls for a $30.15 billion national Flood Defence Fund to address the flood risks across Queensland, New South Wales and Victoria. The plan, intended for implementation over 10 years, is designed to enhance flood resilience, lower insurance costs and reduce disaster recovery expenses. However, the 2025-26 Federal Budget did not include any new commitments for flood specific risk mitigation.

Climate risk hits millions of Australian homes, insurers demand action

Top insurer warns of climate risk to financial sector

A board member of Allianz SE, Günther Thallinger, has called out the risks of increasing global temperatures to the global financial sector. Thallinger has stated that the effect of current policies and global carbon emissions will be a rise of between 2.2 and 3.4 degrees Celsius above pre-industrial levels. An increase in 3 degrees Celsius will result in damage so great that governments will not be able to respond, adaptation will be impossible and risks will be uninsurable. Premiums will increase to such a level that individuals and companies will be unable to pay. This scenario presents a systemic risk “threatening the very foundation of the financial sector.” Thallinger summed up his concerns stating that if this scenario occurred the effects would be wide reaching, “no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.”

Climate crisis on track to destroy capitalism, warns top insurer

Labor home loan plan stirs worry within the Lenders Mortgage Insurance market

Labor’s proposed expansion of the first home buyer low-deposit loan guarantee scheme to provide access to the scheme for all first home buyers has LMI providers worried about the viability of their product. The ICA has criticised the proposal by stating that the move would miss the purpose of the scheme and nationalise the financial product or irreversibly impact its market. The ICA says the scheme should be more effectively targeted to borrowers in greatest need of assistance, such as single parents, essential workers and key workers in regional areas, rather than be expanded to all first home buyers. LMI provider, Helia, said in February that the scheme was having a “material impact” on the LMI market and represented 38% of total lending that was either insured or government-guaranteed.

Labor home loan plan threatens to kill off LMI market: ICA

$11 million fine for cookie cutter advice and conflicted bonus payments

The Federal Court has ordered a $11,030,000 fine for DOD Bookkeeping Pty Ltd (previously Equiti Financial Services) after finding that it had provided inappropriate advice and breached the ban on conflicted remuneration. Equiti Financial Services was found to have paid over $130,000 in bonuses to financial advisers who provided template advice to clients to roll over their super into self-managed super funds and use those funds to buy property through a related entity. The advice provided to 12 clients failed to take into account each client’s individual circumstances and objectives. In awarding the penalty, the Federal Court noted that the contravening conduct was of a deliberate nature and occurred over a number of years and as a result, was sufficiently serious to justify the award of the penalty.

Financial services provider penalised $11 million over “cookie-cutter” advice and conflicted bonus payments

Key dates on the horizon

  • 2 May 2025 – consultation on the first part of the second tranche of DBFO legislation closes.
  • 14 May 2025 – consultation on ASIC’s proposal for a breach reporting dashboard closes.
  • 20 May 2025 – the Sparkes' team is presenting at AILA on CPS 230 and its impact on Delegated Authorities.
  • 6 June 2025 – consultation closes on APRA's enhanced governance proposals.
  • 18 June 2025 – APRA 2025 Annual Business Meeting.
  • *1 July 2025 – APRA prudential Standard CPS 230 commences.*

In case you missed it

Our very own Matt Ellis has been recognised as a finalist in not one but TWO categories for Lawyers Weekly’s Partner of the Year Awards 2025. Matt has been nominated in both the Financial Services and Insurance Partner of the Year categories. We are eagerly awaiting the results which will be announced at the awards night on 12 June.

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