Risk Management

The Australian Prudential Regulation Authority’s (APRA’s) latest System Risk Outlook report has warned financial system stability faces growing threats from an increasingly volatile global environment and the rapid escalation of AI-related risks.

Published twice a year, the report describes what APRA is seeing in the international and domestic environments, highlighting shocks and vulnerabilities that could affect the Australian financial system.

While noting that Australia’s financial system remains strong and stable, the report found persistent uncertainty and the possibility of simultaneous financial and operational disruptions mean this resilience cannot be taken for granted.

Key findings include:

• Global financial markets are under pressure. A sharp repricing could raise funding costs and reduce investment values in Australia;
• AI is creating new risks within institutions, accelerating cyber and operational threats that could have broader effects across the economy and financial system. Reliance on common service providers is also creating channels for widespread disruption; and
• Housing prices have declined and lending activity has slowed, but household and bank resilience remain strong overall. Higher living costs are putting household budgets under pressure, but most households have substantial equity and repayment buffers. High household indebtedness remains a key vulnerability that could amplify a more severe downturn.

ASIC has commenced civil penalty proceedings against Commonwealth Bank of Australia (CBA), alleging tens of thousands of CommBiz business customers, many of them small businesses, were overcharged millions of dollars in fees they were never told about.

ASIC alleges CBA’s CommBiz terms and conditions were misleading because they failed to clearly and accurately disclose all the fees business customers would be charged for Direct Debit and Direct Credit payments.

Business customers were told they would be charged a fee for a payment to or from a third-party account.

However, ASIC alleges CBA also charged an additional, undisclosed fee for the corresponding movement of money into or out of the customer’s CommBiz account.

ASIC is seeking feedback on the Insurance Council of Australia’s (ICA) proposed new General Insurance Code of Practice (Code) as it considers whether to approve the Code.

ASIC has the power to approve codes of conduct under section 1101A(1) of the Corporations Act 2001. The ICA submitted the proposed new Code to ASIC for consideration on 22 October 2026. It is the first time the ICA has sought ASIC approval of the Code.

The proposed Code has been drafted following a review by an independent panel as well as recommendations about the current Code made by the House of Representatives Standing Committee on Economics’ Inquiry into Insurers’ Responses to the 2022 Floods.

The ICA says the proposed Code would make Code obligations contractually enforceable through insurers’ contracts with consumers. The proposed Code also includes changes relating to claims handling, support for customers experiencing vulnerability, family violence protections and standards for expert reports.

This week marks a further milestone for the Consumer Data Right, as Australia’s largest non-bank lenders begin sharing consumer data through the CDR.

This expansion will empower Australian consumers to share their data on their home, car or personal loans to better understand their costs and shop around for a better deal. Combined with banking data, which is already available through the CDR, consumers will be able to see a more complete picture of their finances.

The CDR provides consumers with the option to access and share their data securely, delivering better information, easier comparisons and streamlining paperwork when making decisions about large household costs.

Smaller lenders will commence consumer data sharing through the CDR in May 2027.

The expansion of the CDR to non-bank lending builds on the CDR’s existing footprint in the banking and energy sectors.

More information can be found at the CDR website.

Address by ASIC Commissioner Alan Kirkland at the Ecstra Financial Wellbeing Summit in Sydney on 10 November 2026.

Key points

• Consumers today have access to more financial information than ever before, however it’s getting harder to know who or what to trust.
• Building financial capability increasingly involves building digital financial literacy – giving people the ability to distinguish between different information sources, separate truth from hype, and understand the strengths and weaknesses of AI tools.
• It’s not about putting more information into the system. It’s about understanding what helps people to make better decisions and giving them trusted places to turn.

Many investors are still not being given the information they need to properly understand the risks, fees and conflicts present in private credit investments as complex structures, opacity and deficient disclosure practices persist, ASIC’s second major surveillance of private credit has found.

Between November 2025 and August 2026, ASIC reviewed 24 wholesale and retail private credit funds responsible for a combined $18 billion in assets under management, as well as a sample of financial advice given to retail investors relating to private credit.

ASIC’s surveillance found that many of the poor fee, disclosure, distribution and conflict-management practices identified in ASIC’s first private credit report, released in November 2025, remain.

The findings, outlined in ASIC’s new report (REP 846), have also led to several regulatory interventions, including six interim stop orders and multiple referrals for further enforcement investigation.

ASIC has made interim stop orders preventing Angas Securities Limited (Angas Securities) from offering interests in two managed investment schemes over concerns the funds’ product disclosure statements (PDSs) do not adequately disclose Angas Securities’ financial position and one fund’s exposure to the Bathla Group.

The interim stop orders prevent Angas Securities from offering, issuing, selling, or transferring interests in the Angas Prime Income Fund (ARSN 091 887 400) and the Angas Direct Mortgage Fund (ARSN 151 979 645).

ASIC is concerned that investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position.

ASIC also has concerns about disclosures to investors in the Angas Prime Income Fund relating to its exposure to the collapsed Bathla Group and the risks arising from that exposure.

ASIC’s major review of lead generation activity in the financial advice sector has uncovered examples of involvement of unlicensed or unqualified lead generators in the advice process, exposing oversight failures by licensees.

The review, which focused on a small number of Australian financial services (AFS) licensees that were identified as having links to lead generation activities, found that some allowed lead generators to undertake specialist tasks such as fact-finding, assessment of clients’ risk profiles and discussing advice recommendations.

ASIC also identified that some lead generators were using potentially misleading statements, fear-based claims and non-like-for-like performance comparisons to encourage consumers to review their superannuation or switch investments. This pointed to clear gaps in some licensees’ oversight of what lead generators were saying to clients.

ASIC Commissioner Alan Kirkland said the findings in Report 845 Lead generation advice models: Putting consumers and licensees at risk (REP 845) sends a clear warning to advice licensees that using or allowing lead generation services may put their licenses at risk.

Speech by ASIC Commissioner Alan Kirkland at the Insurance Council of Australia Annual Conference in Sydney on 6 November 2026.

The Federal Court has ordered small amount lender Sunshine Loans Pty Ltd to pay $5.5 million in civil penalties for charging an illegal fee to thousands of consumers that was prohibited under the National Credit Code.

The penalty follows the Court’s finding that, between July 2016 and November 2020, Sunshine Loans entered into more than 670,000 small amount credit contracts containing an unlawful $35 amendment fee (24-074MR).

Consumers were charged a fee for agreeing with Sunshine Loans to reschedule the date of a loan repayment, even though the consumer was not in default.

The Court found Sunshine Loans, a significant participant in the small amount credit industry, charged consumers the illegal fee more than 12,000 times and received payment more than 8,000 times, collecting almost $300,000 from consumers.

ASIC is seeking feedback on proposals to support the transition to the new foreign financial services provider (FFSP) regime, which starts on 8 April 2027.

ASIC proposes to extend existing transitional relief for FFSPs by six months, provide conditional class relief under the new professional investor exemption, and publish regulatory guidance.

ASIC is also explaining how providers can notify ASIC of the exemptions they intend to rely on under the new regime.

The proposals aim to give industry regulatory certainty and support a smooth transition to the new regime.

The Government’s new FFSP regime aims to improve Australian professional and wholesale investors’ access to global markets by exempting certain providers from the requirement to hold an Australian Financial Services (AFS) licence.

The proposed guidance explains the new regime, its statutory exemptions, eligibility criteria and conditions.

ASIC also proposes conditional class relief for eligible FFSPs whose global operating models may fall outside the new professional investor exemption. Subject to conditions, the relief would allow individuals in Australia to support financial services principally provided offshore by an FFSP to Australian institutional investors.