Financial services wrap: February 2025

Introduction

In February 2025, one of the most significant initiatives by the Australian Securities and Investments Commission (ASIC) was releasing a discussion paper on the dynamics between public and private capital markets. ASIC also consulted on buy now pay later guidance, provided updated guidance on ASIC relief and no-action letters, proposed further relief for licensees under the reportable situations regime, and took enforcement action in relation to a potentially misleading prospectus and a superannuation trustee’s failure to merge multiple member accounts.

Meanwhile, the Australian Prudential Regulation Authority (APRA) accepted a court enforceable undertaking in relation to risk management in a superannuation fund, rescinded an information paper, announced a consultation on capital settings for annuity products, and released superannuation and insurance statistics.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) took action in relation to lack of reporting and under-reporting of suspicious transactions by remittance and digital currency exchange providers.

ASIC: Advancing Australia’s regulatory roadmap for public and private capital markets

ASIC has released a discussion paper, Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets, sharing its views on the opportunities and risks emerging from shifts in public and private capital markets.

The discussion paper explores changing dynamics in capital markets such as declining listings on public markets, the rapid growth in investment capital allocated to private markets and the influence of superannuation funds on markets. Key areas of concern include opacity, valuation uncertainty, conflicts of interest, illiquidity and leverage in private markets, including private equity and private credit markets.

ASIC is seeking feedback on the discussion paper and suggestions to improve its regulatory approach, due by 28 April 2025.

ASIC’s media release can be accessed here. See the discussion paper here. Stay tuned for our detailed analysis on this discussion paper.

ASIC invites feedback on buy now pay later regulatory guidance

In preparation for the new buy now pay later (BNPL) laws commencing in June 2025, ASIC has published Consultation Paper 382 Low cost credit contracts (CP 382) and draft Regulatory Guide - Low cost credit contracts (Low Cost Credit Contracts Draft Guidance).

Under the BNPL laws, BNPL providers will need to hold a credit licence and comply with obligations under the National Consumer Credit Protection Act 2009. Additional obligations apply for BNPL contracts that meet the definition of a low cost credit contract.

CP 382 sets out ASIC’s proposals for providing guidance to Australian credit licensees and potential licensees on the obligations that will apply to low cost credit contracts and BNPL contracts under the new consumer credit regime, including the modified responsible lending obligations.

ASIC’s media release can be accessed here. See CP 382 here and Low Cost Credit Contracts Draft Guidance here.

ASIC’s Financial advice update - February 2025

ASIC released a round-up of regulatory developments and issues affecting financial advice, including:

• Professional standards and assessment of qualifications.
• Experienced provider pathway
• Review of compliance with professional standards and professional year programs
• First internal dispute resolution data report and findings
• First report on the adoption of artificial intelligence by licensees
• Summary of recent ASIC enforcement matters
• Update from the Financial Services and Credit Panel
• Review of advice on establishing a self-managed super fund
• Update on reportable situations regime
• Updates to the ASIC newsroom
• Recent ASIC news on financial advice

ASIC’s media release can be accessed here.

ASIC updates guidance for applicants applying for ASIC relief or no-action letters

ASIC has released updated regulatory guides Regulatory Guide 51 Applications for relief (RG 51) and Regulatory Guide 108 No-action letters (RG 108).

Following feedback received during the consultation process (Consultation 11 Proposed updates to RG 51 and RG 108), ASIC has:

• Updated RG 108 to include a reference to relevant content in RG 51 to consider when making a request for a no-action letter.
• Updated RG 51 to include a reference that an applicant may have a right to seek review of ASIC’s decision to the Administrative Review Tribunal.
• Updated RG 51 to remove the proposed reference in Table 2 that a cost and benefit analysis needed to accompany an application.
• Adopted technical or stylistic recommendations from the consultation process to enhance readability.
• Incorporated other regulatory guides into RG 51.

ASIC’s media release can be accessed here. See RG 51 here and RG 108 here.

ASIC issues two interim stop orders

ASIC has issued two interim stop orders on the public offer of redeemable preference shares by Green Planet Recycling Solutions Limited, an unlisted public company.

A prospectus was lodged with ASIC on 29 January 2025 to raise up to $20 million. ASIC was concerned that the prospectus:

• Did not adequately disclose all of the information required under section 710 of the Corporations Act.
• Included misleading statements regarding issues of sustainability and the company’s operating status.
• Did not present information in a clear, concise and effective manner.

ASIC was also concerned that the company had contravened its design and distribution obligations in Part 7.8A of the Corporations Act, as it had not prepared a target market determination.

ASIC’s media release can be accessed here.

ASIC proposes further relief for licensees under the reportable situations regime

ASIC is proposing additional relief to assist AFS licensees to comply with the reportable situations regime.

ASIC proposes to give relief from reporting certain breaches of the misleading and deceptive conduct provision and certain contraventions of civil penalties where:

• The breach has been rectified within 30 days from when it first occurred (this includes paying any necessary remediation)
• The number of impacted consumers is not more than five.
• The total financial loss or damage to all impacted consumers resulting from the breach is not more than $500 (including where the loss has been remediated).
• The breach is not a contravention of the client money reporting rules, and clearing and settlement rules.

ASIC’s media release can be accessed here. See Consultation CS 16 Reportable situations – additional relief here.

APRA accepts court enforceable undertaking and launches investigation

APRA accepted a court enforceable undertaking from a superannuation fund to undertake a holistic risk transformation program to address concerns in relation to its risk management and related issues. The superannuation fund also published a rectification plan to address weaknesses in governance and expenditure processes identified by an independent review as required under the additional licence conditions imposed by APRA in August 2024.

APRA is also investigating possible breaches of the Superannuation Industry (Supervision) Act 1993 by the superannuation fund, with a focus on expenditure management practices.

APRA’s media release can be accessed here.

APRA rescinds information paper on cloud outsourcing and ceases ad hoc credit reporting collection

APRA has rescinded the 2018 Information Paper “Outsourcing Involving Cloud Computing Services” in light of Prudential Standard CPS 230 Operational Risk Management (CPS 230) coming into effect on 1 July 2025. CPS 230 includes formal supervisory coverage for entities with cloud service provider arrangements.

APRA has also ceased the collection of “ARF 923.0 Covid-19 Capital and Credit”.

These changes are intended to reduce regulatory burden and improve clarity.

APRA’s media release can be accessed here. See CPS 230 here.

APRA statement on superannuation fund Federal Court appeal

APRA imposed additional licence conditions on a trustee of a superannuation fund in August 2024.

The Board of the superannuation fund decided to seek judicial review of APRA's decision. In a judgment handed down on 31 January 2025, the Federal Court dismissed the judicial review application (see APRA’s media release here). The Federal Court’s decision has been appealed.

APRA’s media release can be accessed here.

APRA confirms consultation on changes to capital requirements for annuity products

APRA will proceed with a public consultation on capital settings for annuity products. This consultation is intended to support life insurers to increase the availability of retirement products for retirees.

The key proposal, to be released in the second quarter of 2025, will be changing the approach to calculating the ‘illiquidity premium’ in LPS 112 Capital Adequacy: Measurement of Capital.

APRA’s media release can be accessed here.

APRA releases superannuation statistics for December 2024

APRA has released its Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report for the December 2024 quarter.

Some key statistics as at 31 December 2024 include:

• Total superannuation assets of $4,166.9 billion (up 11.5 per cent from December 2023).
• Total APRA-regulated assets of $2,916.6 billion (up 14 per cent from December 2023).
• Total self-managed super fund assets of $1,017.8 billion (up 6.1 per cent from December 2023).
• Exempt public sector superannuation schemes assets of $175.2 billion (up 7 per cent from December 2023).
• Balance of life office statutory fund assets of $57.3 billion (up 1.2 per cent from December 2023).

APRA’s media release can be accessed here. See the statistics here.

APRA releases quarterly insurance statistics for December 2024

APRA has released the following quarterly industry aggregate insurance statistical publications for the December 2024 quarter:

• Quarterly general insurance performance statistics
• Quarterly life insurance performance statistics
• Quarterly private health insurance performance statistics
• Quarterly private health insurance statistics

APRA’s media release can be accessed here.

AUSTRAC campaign targets remitters and digital currency exchanges

AUSTRAC has recently acted against 13 remittance and digital currency exchange providers, with over 50 others still under investigation. This is part of a year-long investigation to address the lack of reporting and under-reporting of suspicious transactions. Alerts have been issued to operators who are suspected of non-compliance.

Late last year, AUSTRAC cancelled, suspended, or refused renewals of registration for several providers who failed to meet their obligations under the AML/CTF Act, with two providers being put on notice and having conditions placed on their registrations. Some faced legal proceedings or were no longer operating businesses requiring registration.

AUSTRAC's efforts aim to improve the industry's reporting on suspicious matters, which is crucial for generating actionable financial intelligence used in criminal investigations. The regulator remains alert about money laundering risks in this sector and continues to address these concerns.

AUSTRAC's records show 417 digital currency exchanges and 5,112 remittance registrations across Australia. Since January 2024, AUSTRAC has issued reminders to 106 entities.

AUSTRAC’s media release can be accessed here.

AUSTRAC intelligence prompts airport drug find and subsequent arrest

An AUSTRAC report led to the arrest of a man charged with importing a commercial quantity of drugs. The report helped authorities intercept a Singaporean national who abandoned two suitcases containing the drugs at Sydney Airport. The Australian Federal Police (AFP) located and detained the 55-year-old man in Adelaide.

AUSTRAC analysts use financial reporting data and other tools to produce targeted financial intelligence for government and law enforcement partners. This intelligence can trigger investigations into crimes such as national security threats, money laundering, drug trafficking, and fraud.

AUSTRAC’s media release can be accessed here.