Regulatory news

The Australian Prudential Regulation Authority (APRA) will limit high debt-to-income (DTI) home lending to pre-emptively contain a build-up of housing-related vulnerabilities in the financial system.

While overall bank lending standards remain sound, APRA has observed a pick-up in some riskier forms of lending over recent months as interest rates have fallen, housing credit growth has picked up to above its longer-term average and housing prices have risen further.

Combined with a resilient labour market, these trends suggest a shift in the financial risk cycle and a potential build-up of vulnerabilities that could undermine banking sector and household financial resilience if left unchecked. In particular, high DTI lending has started to pick up, albeit from a low base, driven by high DTI loans to investors. This is expected to increase further in this part of the cycle, and already high household indebtedness could increase further.

Given these dynamics, APRA is acting now to contain the potential build-up of housing-related risks from high DTI lending by activating a DTI lending limit, with support from the Council of Financial Regulators.

From 1 February next year, the limit on home loans will allow authorised deposit-taking institutions (ADIs) to lend up to 20 per cent of their new mortgage lending at debt of six times income or more. The limit will apply separately to ADIs’ owner-occupier and investor lending.

The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on Australian Ethical Superannuation Pty Ltd (AES), the trustee for the Australian Ethical Retail Superannuation Fund, to address concerns regarding its expenditure management.

The conditions follow APRA’s intensified scrutiny of fund expenditure¹ which has included an APRA review of AES’s related-party expenditure practices.

APRA’s review identified deficiencies regarding the robustness of AES’s approach to related-party expenditure, particularly in relation to investment management agreements with its parent company, Australian Ethical Investments. AES has not demonstrated that it has adequate processes to scrutinise and justify how the fees it pays to its parent company are consistent with the best financial interests of members.

Under the additional licence conditions, AES will be required to appoint an independent third party to review and recommend improvements to these outsourcing decisions and enhance compliance with key regulatory duties, and to implement any recommendations made.

Space, communications and defence systems manufacturer Electro Optic Systems Holdings Limited (EOS) has admitted breaching its continuous disclosure obligations by failing to disclose to the ASX a materially significant decline worth tens of millions of dollars in its 2022 annual revenue forecasts.

Between May and June 2022, EOS issued earnings guidance to the ASX that it expected its 2022 revenue to equal or exceed $212.3 million.

By 25 July 2022, EOS became aware that its 2022 revenue was likely to be $164 million with a possibility of an additional $27 million.

However, EOS did not disclose that information for 14 weeks, until 31 October 2022.

ASIC Chair Joe Longo said, ‘Providing accurate and timely earnings guidance to investors is a core obligation of listed entities and vital to properly informed decision-making in our public markets.

‘EOS has accepted that it failed to correct its guidance when it became aware that its annual revenue forecast was overstated by tens of millions of dollars.

‘Continuous disclosure of market-sensitive information is fundamental to upholding market integrity and supporting a fair and efficient financial system,’ the Chair said.

ASIC and EOS will ask the Federal Court to impose a $4 million penalty, which reflects the seriousness of the contravention while considering EOS’s ongoing cooperation with ASIC’s investigation and its early admission of liability. The penalty is subject to consideration and approval by the Federal Court.

APRA and ASIC have today jointly released the 2025 Retirement Income Covenant (RIC) Pulse Check report, which assesses the progress trustees have made in developing retirement income strategies for Australians approaching or in retirement.

The report highlights that despite RIC obligations being introduced over three years ago on 1 July 2022, the gap is widening between trustees actively promoting better retirement outcomes for their members and those that are not.

While some trustees have shown leadership by investing significant effort to meet the needs of their members transitioning to and in retirement, with some innovating and driving best practice, far too many have been content with making only incremental improvements.

APRA and ASIC again call on industry to lift its focus on improving retirement outcomes for their members. All trustees should take steps to meet better practices as outlined in the report.

ASIC Commissioner Simone Constant said the over 1.5 million Australians already in retirement and the wave of 2.5 million entering retirement over the next decade, deserve better from their superannuation trustees.

The Australian Prudential Regulation Authority (APRA) has released its quarterly superannuation performance publication for the September 2025 quarter.

Key statistics for the superannuation industry as at 30 September 2025:

Total superannuation assets increased by 3.0 per cent over the quarter to $4.5 trillion as at September 2025, of which $3.2 trillion was in APRA-regulated funds.

Total contributions increased by 12.7 per cent to $215.6 billion in the year ending in September 2025. Employer contributions increased by 8.8 per cent over the year to $153.2 billion. Member contributions increased by 23.6 per cent over the year to $62.4 billion.

Benefit payments increased by 12.7 per cent to $136.2 billion in the year ending in September 2025. This increase was the result of lump sum payments rising by 13.8 per cent to $75.3 billion and pension payments increasing by 11.3 per cent to $60.9 billion.

Key statistics for entities with more than six members for the year to September 2025:

*Net contribution flows comprise of contributions plus net benefit transfers, less benefit payments

Copies of the publication are available on APRA’s website

Andrew John Spira, a former director of private credit lenders Skyecap Pty Ltd and Pineapple Funding Pty Ltd, has been permanently banned by ASIC from the financial services and credit industries after he was convicted of fraud by a Darwin court.

Mr Spira was arrested in May 2023 after attempting to leave Australia on a false UK passport, attempting to pay for chartered flights using stolen credit card details, and making false declarations in an Australian passport application.

On 17 November 2023, Mr Spira was convicted in the Northern Territory Local Court of numerous offences, including dishonestly obtaining a financial advantage by deception. He was sentenced to an 18-month good behaviour order and ordered to pay restitution.

As a result of his fraud conviction, ASIC has permanently banned Mr Spira from:

• providing any financial services or engaging in any credit activities
• controlling, whether alone or in concert with one or more other entities, an entity that carries on a financial services business or another person who engages in credit activities, and
• performing any function involved in the carrying on of a financial services or engaging in credit activities.

Under the Corporations Act and the National Consumer Credit Protection Act, ASIC may permanently ban a person from the financial services and credit industries if they are convicted of fraud.

ASIC has made an interim stop order preventing City Finance Lending Pty Ltd (City Finance Lending) from issuing its small amount credit contract (SACC) product to retail clients because of deficiencies in its target market determination (TMD).

City Finance Lending’s SACC product allows consumers to borrow up to $2,000 for personal purposes ‘to meet an unexpected expense or to make a discretionary expense and who meets [City Finance’s] eligibility criteria.’

ASIC is concerned that the TMD for City Finance Lending’s SACC may be deficient in several key areas.

One of Australia’s largest superannuation fund trustees has been ordered by the Federal Court to pay a penalty of $23.5 million for unreasonable delays experienced by thousands of members and claimants arising from serious failures to handle insurance claims in a timely manner.

The penalty has been imposed against United Super Pty Ltd, the trustee of the Construction and Building Unions Superannuation Fund (Cbus), following admissions by Cbus that serious failures caused delays in processing death benefits and total and permanent disability (TPD) insurance claims and impacted more than 7,000 Australians in distressing situations.

The penalty exceeds the $18.5m in revenue United Super declared in the 2024 financial year.

The penalties come on top of Cbus’s own remediation program to pay approximately $32 million in compensation to the estimated 7,402 affected claimants and members for lost earnings and wrongfully charged fees.

ASIC Deputy Chair Sarah Court said Cbus’s failures needlessly exacerbated the distress of people who were already in upsetting situations.

In August 2025, Bendigo and Adelaide Bank Limited (ASX: BEN) (the Bank) engaged Deloitte to conduct an
independent investigation of suspicious activity indicative of money laundering at one of its branches (the Branch)
after the Bank identified and reported the matter to AUSTRAC and law enforcement.

The Deloitte review focused on activity at the Branch, in the period between 1 August 2019 and 1 August 2025.
The Bank ensured the Deloitte review was sufficiently broad to identify both the nature and scope of the issues at
the Branch, and any related systemic Anti-Money Laundering and Counter-Terrorism Financing issues.
In its review, Deloitte concluded that deficiencies existed throughout the relevant period regarding the Bank’s
approach to the identification, mitigation and management of money laundering (ML) and terrorism financing (TF)
risk.

Deloitte observed that these deficiencies extend beyond just the Branch and identified weaknesses and
deficiencies across many key aspects of ML/TF risk management, including in relation to the Bank’s approach to
ML/TF risk assessment and enhanced customer due diligence; oversight of ML/TF risks; its transaction monitoring
program and its approach to customer risk rating.
In relation to transaction monitoring, Deloitte’s findings confirmed that there was deficient coverage of many ML/TF
risk indicators.

The Board is very disappointed with the findings and is fully committed to ensuring that the Bank undertakes the
necessary enhancements to its systems, processes and frameworks to ensure it is fully compliant with its
obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
The Board has committed to fully funding the uplift program to address all deficiencies identified in the Deloitte
review.

While the final outcomes (including costs) are unknown at this stage, the Bank will keep the market informed in line
with its continuous disclosure obligations. The Bank will continue to engage constructively with AUSTRAC, APRA
and ASIC in relation to this matter.

Two directors of Sheffield Insurance Pty Ltd (Sheffield) have been convicted of two offences and fined $15,000 over their role in Sheffield failing to lodge financial statements and auditor’s reports with ASIC for five years.

Phillip Bird of Alexander Heights, WA and Daniel Holmes of Beechboro, WA, were convicted and fined after each pleaded guilty to two charges of aiding, abetting, counselling or procuring Sheffield to commit an offence, one offence being the failure to lodge profit and loss statements and balance sheets (together, financial statements) and the second offence being the failure to lodge auditors’ reports.

ASIC had alleged that, as Sheffield’s directors, Mr Bird and Mr Holmes failed to take steps to ensure that Sheffield lodged financial statements and auditors’ reports with ASIC for each financial year between 2019 and 2023 inclusive and were aware of the obligation to do so.

As the holder of an Australian financial services (AFS) licence, Sheffield is required to lodge financial statements with ASIC within 3 months of the end of each financial year.