Executive Briefing:
For the week of September 17 - 24, 2025
This week, the financial services sector was rocked by news of a leadership overhaul at the highest levels of regulation, set against a backdrop of intense scrutiny over product governance and the ongoing fallout from failed investments. The planned departures of both ASIC Chair Joe Longo and APRA Deputy Chair Margaret Cole signal a pivotal moment for the industry. As the Treasurer begins the search for their replacements, it’s clear a new chapter of oversight is about to begin. The events surrounding the collapse of Shield and First Guardian funds continue to ripple outwards, culminating in Macquarie agreeing to a massive $321 million remediation program and placing trustees and advisers directly in the regulatory crosshairs. This focus on accountability was amplified by ASIC’s deep dive into the booming private credit market, where the regulator has put the industry on notice to lift its standards. For executives, this confluence of events presents a clear message: expect a tougher, more interventionist regulatory environment where product design, distribution, and trustee responsibility will be tested like never before.
The Regulatory Environment
A significant leadership vacuum is set to open at the top of Australia’s key financial regulators. ASIC Chair Joe Longo announced he will not seek reappointment when his term concludes in June 2026, a decision closely followed by the news that APRA’s formidable Deputy Chair, Margaret Cole, will also step down in early 2026. Treasurer Jim Chalmers has confirmed that a merit-based process to fill these critical roles is underway, heralding a period of transition and potential strategic shifts for both agencies.
The departures come as ASIC continues to grapple with the complex fallout from the Shield and First Guardian funds. In a major development, Macquarie Bank has admitted to failings in its former superannuation trustee capacity and will compensate 2,700 members to the tune of $321 million. Despite the remediation, ASIC has indicated that it will proceed with court action against Macquarie. The case has also put financial advisers under scrutiny, with ASIC confirming that it is investigating 140 advisers who recommended the funds to their clients. In parliamentary hearings, ASIC officials stated they had plenty of reasons to decline hosting the funds, putting the responsibilities of trustees squarely in the spotlight. This has sparked a political clash, with the Shadow Assistant Treasurer accusing the government of unfairly "smearing advisers" to deflect from regulatory and legal failures.
Beyond the Shield case, ASIC has fired a clear warning shot across the bow of the burgeoning private credit sector. Following a review, the regulator flagged serious concerns about practices targeting retail and wholesale investors, including inadequate governance, hidden fees, and conflicts of interest. The regulator has backed its concerns with action, issuing interim stop orders against funds managed by La Trobe Financial and Reli Capital, citing deficiencies in their Target Market Determinations (TMDs). La Trobe has since worked with ASIC to address the issues. In response to the review, the Financial Services Council (FSC) announced it would take the lead in developing industry best-practice standards for transparency and governance in private credit.
On the legislative front, the government released draft legislation to prohibit life insurers from using adverse genetic testing results when underwriting policies. This move aims to encourage more Australians to participate in genetic screening without fear of it impacting their insurance eligibility.
Other key regulatory developments include:
- The Australian National Audit Office (ANAO) will review the ATO’s regulation of the SMSF sector for the first time in nearly two decades, a move welcomed by the SMSF Association.
- ASIC issued a new legislative instrument to facilitate the use of digital formats for financial disclosures, aiming to reduce costs and improve accessibility.
- The Reserve Bank of Australia delivered a stern assessment of the ASX, warning it to make "foundational changes" to address failures in its governance and risk management frameworks.
The Economy, Investments & Platforms
The economic outlook remains complex, with the latest ABS figures showing the monthly Consumer Price Index (CPI) indicator rose to 3.0% in the year to August. While the Treasurer noted that underlying inflation remains within the RBA's target band, RBA Governor Michele Bullock warned of significant trade risks on the horizon, even as the domestic economy holds steady.
In investment markets, the spotlight on private credit has been intense. ASIC’s detailed report warned that the rapid growth in the sector could be exposing smaller super funds to unforeseen risks. The regulator’s concerns centre on opaque practices and the potential for retail investors to be steered into unsuitable products with little oversight. These warnings have been echoed by some investment platforms, highlighting the need for greater adviser and client education on the asset class.
The managed accounts sector continues its powerful growth trajectory, with total funds under management (FUM) now exceeding $250 billion, according to research from IMAP and Milliman. The latest census data for the six months to 30 June 2025 showed FUM grew by a significant 24.6%. This trend is being driven by demand for efficiency and sophisticated portfolio management. Colonial First State announced it had surpassed $20 billion in managed accounts FUM, launching a new partnership with MST Financial to expand its offerings. Not to be outdone, BT unveiled a new low-cost investment menu on its Panorama platform in partnership with Vanguard, a strategic move designed to help advice practices become more profitable by lowering client costs.
Elsewhere in the market:
- There is growing adviser interest in crypto ETFs, as products like Monochrome's offering top the leaderboards in a strong year for Bitcoin. ASIC has also signalled it will provide further crypto guidance before Christmas.
- Platinum Asset Management shareholders approved the firm’s merger with L1 Capital, marking a significant consolidation in the listed investment company space.
The Superannuation & Retirement Landscape
The challenge of providing members with confidence and security in retirement remains a defining issue for the superannuation sector. The Shield/First Guardian case has served as a stark reminder of trustee responsibilities. Both ASIC and APRA have been unequivocal, with APRA warning trustees that the involvement of financial advisers in investment decisions does not absolve the trustee of its fundamental obligations. In a roundtable with super CEOs, the regulators highlighted concerns around high-risk switching behaviour, reinforcing the need for robust governance.
This focus on member outcomes is also shaping the debate around the government’s Retirement Income Covenant (RIC) framework. Industry bodies are calling for the government to make the framework's best practice principles compulsory but less prescriptive to allow for flexibility. However, groups including the FAAA and ASFA have warned Treasury against "jumping the gun" by finalising retirement principles before the design and distribution obligations (DDO) related to collectively charged advice fees are settled. The concern is that without clarity on how advice can be delivered and paid for, the retirement income strategies themselves will be built on an unstable foundation.
The pressure on Australians approaching retirement is palpable. Research from AMP shows a national decline in retirement confidence, with half of advised clients feeling financially insecure about their post-work years. In this environment, lifetime income products are being highlighted as a potential solution to mitigate longevity risk and provide greater peace of mind.
The sector is also seeing significant leadership renewal. In a surprise move, Australian Retirement Trust CEO, David Anderson announced his departure after just 18 months in the role. Kathy Vincent, a respected veteran in platform and wealth management, will succeed him. Meanwhile, UniSuper has created a new role of Chief Advice Officer, appointing Andrew Gregory to lead its advice delivery to members.
Finally, a new report from Class has revealed that the SMSF sector is experiencing a surge in establishments, primarily driven by younger Australians who are increasingly drawn to the control and flexibility offered by self-managed super.
Life Insurance & Client Protection
The life insurance sector is on the cusp of a landmark reform, with the government unveiling draft legislation to ban the use of genetic test results in underwriting. The proposed law would prevent insurers from asking for or using the results of an adverse genetic test to inform their decisions on coverage. Assistant Treasurer Daniel Mulino stated the changes are designed to ensure Australians are not discouraged from taking tests that could lead to earlier and more effective medical care.
Regulators are also closely monitoring insurer conduct. While not strictly life insurance-related, it is nonetheless important to note that ASIC has commenced Federal Court proceedings against RACQ, alleging that it sent misleading insurance renewal comparisons to approximately half a million members between 2017 and 2022. The corporate watchdog has also put life companies on notice to improve their sales practices more broadly.
Separately, the Australian Financial Complaints Authority (AFCA) is seeking feedback on a new approach to handling complaints involving non-disclosure and misrepresentation by consumers. This review aims to provide greater clarity and consistency in resolving these complex disputes. The move comes as the industry is also being urged to develop a new "playbook" to better engage with clients under 40, who represent a growing but often underserved market.
Advisers, Advice Practices and Clients
The aftershocks of the Shield/First Guardian collapse are being felt keenly within the advice profession, as ASIC proceeds with its investigation into 140 advisers who recommended the high-risk funds. The case has reignited the debate about the pressures on advisers and the regulatory framework they operate within, with opposition spokespeople arguing that advisers are being used as scapegoats for wider failures in the system.
Despite the challenging environment, there are positive signs for the profession. Data this week shows that the number of advisers has grown by 172 in the financial year to date, a rate of growth far outpacing the previous year and suggesting a stabilisation in the sector.
To drive growth and efficiency, practices are increasingly turning to technology and streamlined investment solutions. The rapid adoption of managed accounts is a prime example, allowing firms to deliver sophisticated investment management more efficiently. The introduction of lower-cost platform offerings, such as BT's new menu with Vanguard, is also being positioned as a key enabler for more profitable and scalable advice businesses.
At the same time, the industry continues to grapple with the advice accessibility gap. There is a growing consensus that digital advice tools could play a crucial role in serving clients who are currently unserviceable through traditional models. However, some commentators have raised concerns that licensees could face class action risks if digital tools are implemented without robust compliance and oversight frameworks.
In the Background: Key Financial Services Organisation Movements
- Joe Longo, Chair of ASIC, announced he will not seek reappointment at the end of his term in 2026.
- Margaret Cole, Deputy Chair of APRA, will also step down from her role in early 2026.
- David Anderson is departing as CEO of Australian Retirement Trust, with Kathy Vincent appointed as his successor.
- Andrew Gregory has been appointed to the newly created role of Chief Advice Officer at UniSuper.
- Dr. Anthony Asher has been named the new Chair of PPS Mutual, succeeding Mike Jackson.
- The Financial Services Council (FSC) has appointed Insignia Financial’s general manager of platforms Scott Hartley and Vanguard’s Daniel Schrimski to its board.
- LGT Crestone has rebranded to LGT Wealth Management to align more closely with its global parent company.
- Brighter Super’s Chief Investment Officer, Mark Rider, will step down from his role.
Key Takeaways for Your Sector
Strategic Planning
- All Sectors: The leadership transition at ASIC and APRA presents an opportunity to reassess your organisation's regulatory engagement strategy. Anticipate a potential shift in supervisory priorities and prepare for a more interventionist approach, particularly regarding consumer outcomes and product governance.
- Investment Managers & Trustees: The intense focus on private credit and the Shield/First Guardian case necessitates an immediate and thorough review of your product governance and distribution frameworks, especially for products offered to wholesale clients. The reputational and financial risks of failure are now exceptionally high.
- Superannuation Funds: The imperative to operationalise the Retirement Income Covenant is growing. The current debate provides a window to contribute to policy formation, but strategic planning must focus on developing practical, scalable solutions that genuinely assist members transitioning to retirement. The leadership change at ART highlights the ongoing dynamism and competition in the sector.
Regulatory Compliance
- Trustees (Super & Managed Funds): APRA and ASIC have made it clear that trustee accountability cannot be outsourced. Your compliance frameworks must demonstrate active and robust oversight of all investment products on your platform, regardless of whether they are internally or externally managed or advised. Expect your DDO and TMD frameworks to be rigorously tested.
- Life Insurers: Begin preparing your systems and underwriting processes for the legislative ban on using genetic test results. This is a significant policy shift that will require changes to applications, training for staff, and clear communication with advisers and customers.
- Licensees: The investigation into advisers linked to the Shield funds underscores the importance of stringent due diligence on your approved product list and robust compliance oversight for adviser recommendations, especially concerning high-risk or illiquid products.
Operational Efficiency
- Platform Providers & Advice Practices: The continued, rapid growth of managed accounts is a clear signal of where the market is headed. For platforms, this means continuing to invest in functionality and choice. For advice practices, adopting managed accounts and leveraging new low-cost platform solutions (like the BT/Vanguard partnership) can unlock significant efficiencies and improve client outcomes.
- All Sectors: ASIC’s new instrument, facilitating digital disclosure, should be seen as a trigger to review your communication strategies. Transitioning to digital can reduce costs, improve engagement, and enhance the client experience, but requires careful implementation to ensure compliance and accessibility.
