Australia's financial services sector continues to navigate a dynamic landscape shaped by ongoing economic shifts and a proactive regulatory environment. With the Federal Budget in recent memory and the horizon of potential legislative changes, the industry remains attuned to announcements from key bodies. This week has seen significant movements in regulatory enforcement, particularly around compliance and market integrity, alongside continued focus on enhancing the resilience and efficiency of the financial system.

Regulatory Developments

This week, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have been particularly active. ASIC has granted a limited no-action position regarding deficiencies in Ongoing Fee Arrangement (OFA) written consents, specifically concerning the omission of account numbers, a measure aimed at easing industry transition following the Delivering Better Financial Outcomes (DBFO) reforms. This no-action position applies to consents between January 10, 2025, and September 5, 2025, provided a new, compliant OFA is in place by the latter date. ASIC Commissioner Simone Constant also spoke at the Conexus Fiduciary Investors Symposium, reiterating that while ASIC is not rushing to regulate private markets, it is keenly focused on understanding them due to the substantial superannuation and insurance monies invested.

To boost public listings, ASIC has launched a two-year trial to fast-track Initial Public Offerings (IPOs) for eligible companies. This initiative, which could reduce the IPO timetable by up to a week, involves ASIC informally reviewing offer documents 14 days before formal lodgement and allowing retail investor applications during the public exposure period. This aims to increase deal certainty and make listing more attractive amid declining IPO activity.

APRA has reinforced its expectations on authentication controls within the superannuation sector, warning Registrable Superannuation Entity (RSE) licensees about persistent weaknesses in information security, particularly multi-factor authentication (MFA). APRA expects all trustees to undertake specific actions by August 31, 2025, including self-assessments and notification of material control weaknesses. For those impacted by recent credential stuffing incidents, a special purpose engagement to assess authentication controls is required.

Furthermore, ASIC has commenced legal proceedings against Australian Unity Funds Management for alleged failures to comply with Design and Distribution Obligations (DDO) and Target Market Determinations (TMD) requirements. In other enforcement news, a former CEO of the collapsed stockbroking firm BBY has been charged with dishonest conduct related to a $192 million share acquisition, and four individuals have pleaded guilty to market rigging and dealing with proceeds of crime in a Telegram "pump and dump" scheme.

ASIC and APRA also updated their joint review of life insurance premium practices, noting improvements by life companies in re-rating, marketing, and disclosure. However, they continue to expect sustainably designed and priced products that prioritise consumer needs.

Economic Updates

The Australian economy saw modest growth in the March quarter of 2025. Treasurer Jim Chalmers announced that the National Accounts for the March quarter showed the economy growing by 0.1%, with household consumption growing by 0.4%. Still, average consumption per person is falling for the fifth consecutive quarter. The Treasurer acknowledged ongoing cost-of-living pressures and a challenging global environment. Consumer inflation expectations stood at 4.1% in May 2025, marginally down from 4.2% in April. While the Reserve Bank of Australia (RBA) kept the cash rate unchanged at 4.35% at its last meeting, inflation remains a key challenge, with the RBA aiming to return it to the 2–3% target band. Employment data for May 2025 was released on June 4, with further updates expected in early July.

Legislative & Political Updates

The political landscape continues to shape policy. Treasurer Jim Chalmers reiterated the government's intention to proceed with taxing unrealised gains for high superannuation balances (Division 296) [], a policy the Financial Services Council (FSC) projects could impact 500,000 Australians without indexation. There have been claims refuting that the Division 296 consultation has been watered down. The government has also proposed changes to ancillary funds.

Dr Daniel Mulino MP, the new Assistant Treasurer and Minister for Financial Services, has commenced meetings with industry bodies. The Financial Advice Association Australia (FAAA) has expressed encouragement following their initial meeting with Minister Mulino, particularly regarding his support for DBFO reforms. The industry expects continuity in its dealings with Treasury following the promotion of Steven Kennedy to head the Department of Prime Minister and Cabinet and the appointment of Jenny Wilkinson as the new Secretary to the Treasury.

Industry Responses

Industry bodies have been vocal in their responses to regulatory and legislative developments. The FSC's latest policy update (Issue 85, June 4) highlighted their new Retirement Best Practice Framework and ongoing fraud and scam sharing initiatives. They also detailed their engagement with ASIC on compliance with climate-related financial disclosures and sought guidance from the Australian Accounting Standards Board (AASB).

The superannuation industry, through associations like the Association of Superannuation Funds of Australia (ASFA), has welcomed APRA's reinforced expectations on cyber resilience and fraud controls, particularly the focus on MFA, and is working to align its efforts with APRA's August 31, 2025, deadline. Trustees are being urged to rectify OFA consents by September 2025.

Concerns continue within the industry regarding the accuracy of the Financial Advisers Register, with ASIC flagging inaccuracies. Furthermore, the aged care reforms, with implications for financial advice, have been pushed to November 2025, providing a longer lead time for industry adjustments. The concept of retirement advice through superannuation is gaining traction as a vital solution for increasing access to advice.

Analysis & Action Items

Financial services stakeholders need to prioritise adapting to the evolving regulatory landscape.

• Financial Advisers & Licensees:
  • Urgent: Review and rectify all Ongoing Fee Arrangement (OFA) written consents to include account numbers where previously omitted. Ensure new, compliant OFAs are in place by September 5, 2025, to avoid termination of arrangements and potential civil penalties.
  • Ongoing: Regularly check the ASIC Financial Advisers Register for accuracy and promptly address discrepancies. Stay updated on the outcomes of the Delivering Better Financial Outcomes (DBFO) Tranche 2, particularly around the Client Advice Record (CAR) and superannuation nudges.
• Product Providers (especially Superannuation Funds & Life Insurers):
  • Immediate: Superannuation funds must perform self-assessments of information security controls, specifically authentication, by August 31, 2025. Notify APRA of any material control weaknesses and conduct breach assessments as required by CPS 234.
  • Critical: Life insurers should continue to refine product design and pricing to ensure sustainability and premium stability, adhering to APRA and ASIC's expectations regarding duration-based pricing and clear consumer disclosure.
• All Stakeholders:
  • Strategic: Monitor the progress of the Compensation Scheme of Last Resort (CSLR) review, expected in July, and its potential implications for industry levies.
  • Proactive: Engage with ongoing consultations related to climate-related financial disclosures and other regulatory simplifications to ensure industry perspectives are heard.

Looking Ahead

The coming weeks and months will see several key developments:

• July 2025:
  • Expected release of the Compensation Scheme of Last Resort (CSLR) review findings.
  • Anticipated release of June 2025 employment data by Jobs and Skills Australia (July 2).
• August 31, 2025:
  • The deadline for RSE licensees is to undertake specified actions regarding information security controls and authentication as per APRA's directive.
• September 5, 2025:
  • Deadline for financial advisers and licensees to have new, compliant OFA written consents in place following ASIC's no-action position.
• November 2025:
  • Implementing aged care reforms requires financial services professionals to be prepared for related advice opportunities and considerations.
• Ongoing:
  • ASIC's two-year trial of fast-track IPOs will be closely monitored for its impact on public market listings.
  • The continued government and Treasury focus on the "Future of Financial Advice" reforms and the tax on high superannuation balances (Division 296).
  • ASIC's refreshed website is expected to go live by June 30, 2025, aiming for an improved user experience for regulatory resources.