As regulatory scrutiny intensifies across Australia's financial landscape, the sector shows promising recovery signs, with 90 new financial advisers joining the profession in 2025 and the retail life insurance market finally rebounding. This week's developments highlight the controversial Compensation Scheme of Last Resort (CSLR) debate, heated practice valuation conditions, and accelerating AI adoption alongside innovative approaches to superannuation investments and private markets.
Financial Advice Highlights
CSLR reforms dominate industry discussions, with multiple associations intensifying their push for change. The FAAA is calling for changes to insolvency laws, while the SIAA argues the scheme is built on moral hazard and unfairly impacts advisers. Despite this regulatory pressure, the advice sector's M&A environment remains exceptionally competitive. Count Financial reports profit growth following its Diverger acquisition and AZ NGA securing a $345 million private credit deal from Barings, signaling new financing options for growth-oriented practices.
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Investment Landscape
ASIC has dramatically escalated its fight against investment fraud, now shutting down approximately 130 scam websites weekly—over 10,000 sites in recent months. The regulator is also pursuing multiple court actions related to troubled managed investment schemes, including freezing the assets connected to the Shield Master Fund. Meanwhile, alternative investments continue gaining traction despite regulatory concerns about retail access, with REITs positioned for what analysts term a watershed moment in 2025 and ETF markets evolving as GCQ enters the market.
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Superannuation Developments
Insurance through superannuation is experiencing a resurgence, with ASFA reporting that super-linked insurance now protects an additional six million Australians. In the self-managed space, data from Ausiex reveals that advised SMSFs demonstrate significantly better portfolio diversification than unadvised counterparts, reinforcing the value of professional financial advice. External advisers maintain the lion's share of $1.7 billion in super fund advice fees, underlining the continued importance of adviser relationships with super funds.
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Life Insurance Trends
The retail life insurance sector shows encouraging signs of recovery after years of contraction, with advisers urged to consider protection products amid surging cost-of-living pressures. APRA has confirmed its forthcoming consultation on annuity capital requirements, addressing long-standing industry concerns about restrictive capital settings. This move has received broad industry support, with insurers welcoming the potential for more competitive pricing and product innovation in the retirement income space.
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Regulatory Focus
Treasury Secretary Steven Kennedy has distanced his department from proposals for compulsory superannuation drawdowns, suggesting a more nuanced approach to retirement income policy. Meanwhile, Assistant Treasurer Stephen Jones announced plans to expand the Consumer Data Right (CDR) to deliver better consumer deals across multiple financial service sectors. Industry bodies continue to criticise ASIC's levy calculation methodology and timing as advisers express concern about receiving levy notices.
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Looking Ahead
Several key trends are emerging that will shape the coming months in financial services:
- The CSLR debate will intensify as industry bodies push for structural reforms
- Practice valuations should remain strong with continued M&A activity in the advice sector
- AI adoption is accelerating with a greater focus on practical client service applications
- Life insurance presents growing opportunities as the industry recovers amid cost-of-living pressures
- Interest rate movements and election positioning will increasingly influence investment strategies
Financial professionals should monitor the upcoming Federal Budget and election cycle, potential tax reforms, and evolving regulatory frameworks while exploring opportunities in alternative investments, digital transformation, and strategic practice valuation.
