For the week of 6 August - 20 August 2025
Welcome to your executive briefing, returning after a week's break to cover all the key news from the past fortnight. The recent fortnight saw the industry at a fascinating crossroads of macroeconomic shifts and intense regulatory pressure. The Reserve Bank's decision to cut interest rates for the third time has provided some economic relief, but this is overshadowed by a flurry of activity from regulators. ASIC and APRA have signalled a clear rejection of a "computer says no" compliance culture, calling for more proactive and meaningful engagement from boards and executives. This was emphasised by ASIC's high-profile legal action against Mercer Super for alleged systemic reporting failures. Meanwhile, fallout from the Shield First Guardian collapse continues to ripple through the advice sector, sparking urgent debates over the CSLR levy and the need for stronger regulatory safeguards. For executives, this period calls for a dual focus: navigating the opportunities of a shifting economic landscape while strengthening governance and compliance frameworks amidst zero-tolerance regulatory oversight.
The regulatory bodies have been particularly active, sending unambiguous signals about their expectations on compliance, governance, and consumer protection. The dominant theme is a push for accountability, moving beyond tick-a-box exercises to substantive cultural change.
ASIC and APRA have jointly rejected a "computer says no" compliance culture, warning that an over-reliance on automated systems without adequate oversight is unacceptable. This message was powerfully reinforced when ASIC initiated legal proceedings against Mercer Super, alleging longstanding and systemic failures to report investigations into member services, including the handling of deceased members' accounts. The regulator is also suing Mercer over allegations it hid service failures from its members. In another significant action, NAB and AFSH were penalised $15.5 million for failures in supporting customers facing financial hardship.
The collapse of Shield First Guardian continues to generate regulatory heat. Assistant Treasurer Daniel Mulino has flagged that the government is considering additional regulatory guardrails to prevent similar failures, even as he affirmed the saga would not deter the government's push for its Delivering Better Financial Outcomes (DBFO) reforms. The industry is bracing for the financial impact, with growing alarm over the Compensation Scheme of Last Resort (CSLR) levy. The FAAA has warned that an unchecked CSLR levy could "bankrupt everybody", while other industry voices argue that a failure to impose the levy could risk the CSLR's collapse. The SMSF Association has backed a review, calling for the costs to be spread as widely as possible.
In other enforcement news, ASIC has continued its crackdown on misconduct. The Administrative Review Tribunal upheld a 10-year ban on United Global Capital director Joel Hewish. Another adviser connected to a UGC-Shield-linked firm was banned for four years, and a former Gold Coast property developer was sentenced to eight years in prison for defrauding superannuation investment funds. ASIC also took action against a further 28 SMSF auditors in FY25.
The major economic news was the Reserve Bank's decision to cut interest rates, a move widely anticipated by markets. Economists now expect a gradual easing cycle, which is forecast to help the Australian equity rally persist through the year. The ASX has indeed been performing strongly, with the ASX200 hitting another record high during the period.
On the investment front, Artificial Intelligence remains a key driver of growth. One strategist noted that AI is powering growth beyond traditional investments, while major institutions are making tangible moves in the space. CBA has flagged AI as a major investment focus, and AMP has launched a strategic partnership with UNSW to enhance its real-world AI applications.
Private credit continues to attract attention from both investors and regulators. A chief investment officer has warned super funds about the dangers of mischaracterising private credit as debt, suggesting some funds are underestimating the risks. This comes as ASIC prepares to review the fast-growing sector. At the same time, managers are expanding their offerings, with Betashares launching a new private capital division.
In platform news, HUB24 reported a 44% rise in underlying profit on the back of record inflows. Technology provider Iress confirmed it is in acquisition talks as its core earnings rise, a development that follows the departure of its deputy chief executive. Challenger also outlined its future growth plans after experiencing significant FUM outflows of $11.6 billion.
The retirement phase of superannuation is squarely in the government's focus, with Treasury launching consultations on reforms designed to improve retirement income solutions. Regulators have described the gap between leaders and laggards in providing retirement income responses as a "real problem". In a speech on "The Great Retirement Race," ASIC outlined its expectations for funds to better support members into retirement. Industry bodies are actively engaging, with the FSC cautioning against a one-size-fits-all retirement policy and emphasising the need to prioritise individual outcomes.
The controversial Division 296 tax on balances over $3 million continues to cause uncertainty. Some commentators suggest it is not too late for advisers to help stop the tax, while the SMSF Association has called for a deferred start date if the bill becomes law.
In fund news, Australian Retirement Trust (ART) announced its chair, Andrew Fraser, will retire. On the investment side, several major funds, including Cbus, MLC, and AMP Super, have invested more into Atmos Renewables, signalling a continued commitment to the energy transition. Meanwhile, APRA has been encouraging stronger cyber resilience across the superannuation sector following a CEO roundtable on the topic.
The life insurance sector is grappling with the national mental health crisis, with industry leaders calling for urgent government action. The Council of Australian Life Insurers (CALI) has backed immediate action to tackle the crisis, a position supported by other industry groups. This focus is reflected in claims data, with one major insurer reporting that mental health claims have reached 21% at TAL.
Regulators are also turning their attention to sales practices. ASIC has put the industry on notice, turning its spotlight on direct life sales practices and advocating for linking sales staff pay to compliance outcomes.
On the product and technology side, innovation continues. NEOS has launched a new comparison tool, and Acenda has formed a data partnership with UnderwriteMe to create an end-to-end digital solution. HESTA has also moved to lower its insurance fees after renewing its partnership with AIA. In a positive sign for the sector, there has been growth in new business, indicating a healthy trend.
The financial advice sector continues its slow but steady recovery, with adviser numbers showing more gains as new entrant flows continue. Data suggests that smaller licensees now boast more experienced advisers, indicating a structural shift in the industry.
However, the fallout from the Shield First Guardian collapse remains a dominant issue for licensees. Sequoia is facing $22 million in complaints, while Interprac has been cutting ties with firms linked to the failures.
On the professional standards front, the Financial Advice Association of Australia (FAAA) is expanding its approved specialisations program to embrace broader advice expertise. This move aims to help advisers better serve client needs in areas like aged care, which one commentator noted should be a key part of SMSF advice. In a separate development, a technical flaw in the fee consent process has been causing angst for advisers. The Productivity Commission has also weighed in on adviser standards, suggesting the removal of what it calls excessive entry requirements.
Several noteworthy structural changes and appointments occurred. Insignia Financial has offloaded its self-licensed offering, IOOF Alliances, to Entireti, which has unveiled the new licensee services brand. AMP has appointed Linda Elkins to its board, bringing significant superannuation and investment experience. In a strategic move, WT Financial has announced its second advice “HubCo”, and is expanding through joint ventures. Finally, Magellan Financial Group has rebranded its investment management arm as MFG, ending its long-standing partnership with MFF.