The Adviser Ratings Executive Briefing:
For the week of September 11 to September 18, 2025
This week, the financial services industry was forced to confront the high cost of its past, even as it grappled with the transformative potential of its future. A landmark $120 million class action settlement by AMP served as a stark reminder of the long tail of legacy conduct issues, a theme echoed by regulators who handed down a massive $240 million penalty against ANZ for widespread misconduct. This intense focus on accountability and remediation played out against a backdrop of forward-looking debate, particularly around the rapid adoption of Artificial Intelligence. With new analysis showing nearly half of all retail investors are now turning to AI, a clear tension has emerged. Executives are navigating the dual pressures of managing historical liabilities and positioning their organisations for a future where technology, regulation, and client expectations are being fundamentally reshaped.
The Regulatory Environment
Regulators sent a clear message this week that misconduct carries a significant price, with ASIC’s enforcement actions dominating the headlines. In one of the week’s most significant developments, ANZ admitted to widespread misconduct and agreed to pay $240 million in penalties following regulatory action. The enforcement covered failures in its institutional bond trading business and retail misconduct, with ASIC delivering a sharp rebuke for what it called "clearly grubby" institutional failings. This action underscores a zero-tolerance approach to systemic failures and serves as a critical warning for all institutions to review their compliance and risk management frameworks.
ASIC’s focus on individual accountability was also evident, as evidenced by the sentencing of a Melbourne man in the Kidman Resources insider trading case. In a key update for the advice sector, the regulator also released a consolidated legislative instrument for advice-related matters, a move aimed at providing greater clarity for licensees. At the same time, APRA released notes from its August 2025 Superannuation CEO Roundtable, indicating a continued focus on trustee oversight and member outcomes.
The operational strain on the dispute resolution system was also brought into sharp focus. AFCA warned of the "brutal human cost" as its dispute backlog grows, highlighting the immense pressure on the system from recent large-scale failures. This was compounded by a new report from the Office of the Australian Information Commissioner (OAIC), which revealed a record year for data breaches, placing cybersecurity and data governance at the top of the risk agenda.
The Economy, Investments & Platforms
A week of significant leadership changes and strategic shifts highlighted the dynamic nature of the investment sector. In a major development, the Future Fund announced the departure of its Chief Investment Officer, Ben Samild, who is reportedly en route to a new role in Abu Dhabi. The departure comes as the sovereign wealth fund continues to deliver strong portfolio growth. This high-level move signals the ongoing global competition for top-tier investment talent.
In the funds management space, the debate over product ratings intensified. Following Lonsec's earlier downgrade of Metrics funds, Zenith reaffirmed its ratings on the private credit manager, creating a divergence that underscores the challenges advisers face in conducting due diligence. One commentator explored this issue, asking, "When top-rated funds disagree, should you trust the scores?".
Market activity also saw Bennelong Funds Management expand into private credit through a US partnership, reflecting the continued demand for alternative income sources. On the technology front, the growing influence of AI was a dominant theme. New research has revealed that almost half of retail investors are now turning to AI for investment decisions. Another analysis has highlighted that for new advice practices, AI is proving to be a costly yet transformational expense.
The Superannuation & Retirement Landscape
The superannuation sector grappled with major remediation costs and operational overhauls this week. In a landmark development, AMP agreed in principle to a $120 million settlement in a class action concerning superannuation fees, a legacy issue stemming from the Royal Commission. The settlement underscores the substantial financial implications of historical misconduct and the ongoing remediation process within the industry.
In another critical development, Cbus Super announced it is updating its death benefits process following criticism of systemic failings. The fund has vowed to deliver faster payouts, a move that directly addresses a key area of member dissatisfaction and regulatory concern across the industry. This has strategic implications for all funds, emphasising the need to review and improve the efficiency and compassion of claims handling.
On the policy front, there are signs that the controversial Division 296 tax on balances over $3 million may be paused, with one report suggesting changes are likely following industry pushback. Meanwhile, the Reserve Bank of Australia’s Deputy Governor, Andrew Hauser, issued a stark warning to super funds about a potential $1 trillion foreign exchange risk, urging them to expand their hedging strategies as global investments grow.
Life Insurance & Client Protection
The life insurance sector is facing increased scrutiny regarding product design and claims handling, particularly in relation to mental health. Insurers were warned by the Life Code Compliance Committee over the use of "blanket exclusions" in their policies, a practice seen as reinforcing stigma. This comes as new research from the Financial Services Council indicates that insurers' approaches may be reinforcing the stigma around mental health. The regulatory focus on this issue suggests that product design and underwriting philosophies will need to evolve to meet changing community expectations.
At the same time, research has revealed that young people want more from their life insurance, signalling a clear opportunity for product innovation and engagement with a new generation of clients. In corporate news, PPS Mutual appointed Dr Anthony Asher as its new Chair, succeeding Mike Jackson. In product news, Brighter Super has added Zurich OneCare members to its offerings as part of its ongoing growth strategy.
Advisers, Advice Practices and Clients
For the advice profession, the debate over the Compensation Scheme of Last Resort (CSLR) continued unabated. Industry bodies, including the SMSF Association, maintained their position that the cost of any special levy required to cover major collapses should be a shared responsibility, not one that falls solely on advisers. One analysis suggested that better compliance in the past could have mitigated the CSLR impact of licensee insolvencies, directly linking robust oversight to the long-term sustainability of the compensation scheme.
The intersection of advice and superannuation also remained a key focus. The Financial Advice Association of Australia (FAAA) has urged for safeguards to be put in place to stop "super nudges" from being mistaken for personal advice, a critical issue as super funds expand their member engagement activities.
Technology continues to be a double-edged sword for practices. While the uptake of free AI tools may be a sign of a growing gap in the advice market, there are also warnings that digital advice tools could place licensees at risk of class actions if not implemented with sufficient care. This highlights the need for a cautious and strategic approach to technology adoption.
In the Background: Key Financial Services Organisation Movements
Several significant leadership changes and appointments were announced this week. The biggest news was the departure of Ben Samild as Chief Investment Officer of the Future Fund. Brighter Super’s Chief Investment Officer, Mark Rider, is also set to step down. The Financial Services Council (FSC) appointed two new directors to its board, welcoming representatives from Insignia and Vanguard. ASIC announced a new Chair, Deputy Chair, and members for its Markets Disciplinary Panel. In the life insurance sector, PPS Mutual appointed a new chair.
Key Takeaways for Your Sector
- For Superannuation Executives: The $120 million AMP settlement is a powerful reminder to rigorously review and manage the risks associated with legacy products and fee structures. The Cbus decision to overhaul its death benefit process should prompt an immediate internal review of your own member service standards, particularly in sensitive areas. The RBA's warning on FX risk necessitates an urgent review of your fund's investment and hedging strategies to ensure they are robust enough to support growing overseas allocations.
- For Life Insurance Executives: The regulatory focus on mental health exclusions is a clear signal to review and modernise product design and underwriting rules proactively. This is no longer just a social issue; it is a direct compliance and reputational risk. The research into what younger Australians want from insurance is a direct input for your strategic planning and product development teams.
- For Investment & Platform Executives: The departure of the Future Fund's CIO may signal shifts in institutional strategy and capital allocation that are worth monitoring. The continued growth in retail investor use of AI presents a significant opportunity for product development and digital engagement, but it must be balanced with robust consumer protections. The divergence in ratings for a major private credit manager highlights the critical importance of enhancing your own due diligence and third-party risk management frameworks.
- For Advice Licensee Executives: ASIC's consolidated advice instrument necessitates an immediate review of your compliance documentation and processes. The ongoing debate around "super nudges" requires you to ensure your advisers have clear guidance on the line between general and personal advice. The potential for digital advice tools to create class action risk means any technology implementation must be accompanied by a thorough legal and compliance review to manage this emerging liability.