Regulatory news

The Australian Prudential Regulation Authority (APRA) has proposed a simpler, clearer and more streamlined pathway for banks to become accredited to use the internal ratings-based (IRB) approach to calculating credit risk-weighted assets.

The IRB method is one of two approaches banks can use to calculate risk-weighted assets, which determines the amount of regulatory capital they need to hold for credit risk.

While the vast majority of banks use the standardised approach, APRA has approved six of the largest banks to use the IRB approach.

The IRB approach can provide a small financial benefit to banks by marginally reducing their capital requirements. However, accreditation to use the IRB approach requires banks to demonstrate a high level of sophistication in their risk management practices that has historically been too resource-intensive for most banks to achieve.

Noting that some medium-sized banks have expressed interest in obtaining IRB accreditation, APRA is seeking to make the pathway to IRB accreditation more accessible for these banks.

In a consultation paper released today, APRA has proposed a range of changes to the IRB accreditation pathway designed to help more banks access the IRB approach.

A consultation paper outlining the proposed changes is available via the link.

AUSTRAC has published new reforms guidance. This marks another important step in helping you prepare for the new anti-money laundering and counter-terrorism financing (AML/CTF) laws coming into effect.

Commissioner Alan Kirkland delivered a keynote address at Credit Law 2025 on 14 October.

Here are the highlights of Alan’s address:

• ASIC’s role is to ensure consumer credit protections are universally applied and enjoyed. That’s why ongoing work to examine compliance across the sector continues to be a priority.
• Key areas of focus include mortgage brokers, motor vehicle finance, financial hardship, debt management, credit repair and debt collection.
• ASIC continues to take action across the spectrum, wherever we see credit-related misconduct. Entities whose conduct causes harm to consumers – or harm to their financial futures – should expect ASIC to take an active interest.

ASIC is concerned that many Australians may not have the information they need to make confident and informed decisions about retirement after a review identified a lack of urgency in improving retirement communications among superannuation trustees collectively responsible for millions of members.

The Australian Prudential Regulation Authority (APRA) has released its Innovate Reconciliation Action Plan (RAP) for the period October 2025 to September 2027. This is APRA’s second Innovate RAP and third RAP since 2017.

The latest Reconciliation Action Plan builds on APRA’s previous commitments and focuses on four key themes:

• Creating a working environment that increasingly attracts, retains and develops Aboriginal and Torres Strait Islander employees.
• Broadening the impact of our RAP activities throughout APRA’s five offices across Australia and forming local cultural connections.
• Developing opportunities for more APRA employees to engage personally with First Nations people and cultures, growing their cultural awareness and contributing to reconciliation more directly in the broader Australian community.
• Further exploring APRA’s specific role to promote reconciliation within its sphere of influence – in partnership with other financial regulators – in a way that aligns with APRA’s mandate.

Rebuilding after the storm
Commissioner Alan Kirkland delivered remarks at the Insurance Council of Australia Annual Conference in Sydney on 10 October.

Here are the highlights of Alan’s remarks:

• The insurance industry has an enormous task ahead to rebuild trust with the Australian community following a challenging period of claims handling failures.
• The development of a new General Insurance Code of Practice that will be enforceable by contract is an important step towards rebuilding trust. However, unless the provisions themselves improve overall levels of consumer protection, it will be a step backwards.
• Our challenge to industry over the next year is to commit to a code that will make a real difference to your customers. Simple cannot be code for stripped out.

The Australian Prudential Regulation Authority (APRA) has published remarks delivered by Member Suzanne Smith to the 2025 Insurance Council of Australia conference in Sydney.

Under the headline “From risk to resilience: Futureproofing Australia’s insurance sector” Ms Smith addressed how the sector can prepare itself by focusing on resilience, innovation, and leadership in a world of rising risks such as climate change, cyber threats, and geopolitical instability.

She emphasised the importance of getting the basics right – strong risk management, operational resilience, and accountability – while encouraging insurers to embrace innovation and transparent customer engagement. She concluded that effective leadership and a healthy risk culture are essential for building trust and ensuring the industry remains robust and prepared for future challenges.

ASIC is calling on financial services entities to strengthen governance and risk management after a review found weaknesses in the use of offshore service providers exposing consumers and investors to potential harm.

The Australian Prudential Regulation Authority (APRA) has published Chair John Lonsdale’s Opening Statement to the Senate Economics Legislation Committee.

On 9 October, the Government introduced Payday Super legislation into Parliament to take effect 1 July 2026. This measure is not yet law.

Tax professionals should be aware of how the proposed Payday Super reform may affect employer clients.