Financial Services Snapshots

Financial Markets

APRA releases response to submissions on Consequential reporting changes to ARS 110.0 – Capital Adequacy

On 23 April 2025, APRA released its response to submissions on proposed updates to Reporting Standards ARS 110.0 Capital Adequacy (ARS 110). The proposed updates were to:

• collect data on "unrealised losses for securities in the liquid asset portfolio that are not measured at fair value";
• validate the risk-weighted assets equivalent amount of the Interest Rate Risk in the Banking Book (IRRBB) capital requirement in ARS 110, against the IRRBB Capital Charge value submitted in Reporting Standard ARS 117.1 Interest Rate Risk in the Banking Book; and
• Calculating Item 3.1 of Section B in ARS for reporting periods ending on or after 31 March 2026

The draft changes were released on 6 December 2024 for consultation, however, as no submission were made in response to the consultation, APRA intends to proceed with the proposed changes.

See: Media Release; Letter; ARS 110.0

Consumer Credit

AFCA releases update on implementation of BNPL reforms

On 29 April 2025, AFCA released an update on the implementation of the Buy Now Pay Later (BNPL) reforms taking effect on 10 June 2025. These reforms will provide enhanced protections for Australian consumers under new rules governing Low-Cost Credit Contracts, which includes, BNPL products. AFCA announced that all consumers will now have access to free and independent dispute resolution through AFCA when they are unable to resolve complaints directly with BNPL product providers.

The changes that will impact for financial firms include that BNPL providers must now:

• comply with the National Credit Act, National Credit Code and responsible lending obligations; and
• consider financial hardship requests and credit reporting obligations.

The immediate mandatory obligations include:

• holding an Australian Credit License;
• becoming a member of AFCA; and
• establishing an Internal Dispute Resolution process and other process for responding to External Dispute Resolution Complaints

The final day for AFCA membership applications to be received and processed ahead of the regulatory deadline is 26 May 2025.

See: Media Release

ASIC releases new regulatory guidance to support buy now pay later industry reforms

On 8 May 2025, ASIC published Regulatory Guide 281 (RG 281) to assist low cost credit contract providers to comply with their key obligations. Following the release of the draft regulatory guide and Consultation Paper 382 Low cost credit contract (CP 382) in February, ASIC received 16 submissions for clarification and added examples. ASIC clarified parts of the guide and added examples in response to feedback.

In January 2025, ASIC released Information Sheet 285 Buy now pay later credit contracts: Credit licensing (INFO 285) that provides guidance on what licensing requirements apply to anyone engaging in credit activities involving buy now pay later contracts.

ASIC noted that providers that do not have their credit licence application accepted for lodgement by ASIC by 10 June 2025 may be engaging in unlicensed conduct if they continue to operate.

See: Media Release; RG 281; CP 382; INFO 285

Licensing

ASIC launches new portal for Australian financial services licensees

On 5 May 2025, ASIC launched its digital portal for applicants to apply for Australian financial services (AFS) licences. It is integrated into the ASIC Regulatory Portal and is designed to provide a more efficient and accessible experience for AFS licence applicants. The transition will allow the existing eLicensing system to remain operational until the transactions are available in the new portal. Until then, AFS licence applicants can choose to lodge an application for an AFS licence via the Regulatory Portal or the eLicensing system.

The key changes involve:

• automatic pre-filling of application details;
• avoiding the need to upload additional documents; and
• providing services at a more specific level so ASIC can better understand the financial services applicant intend to provide.

Guidance will be provided by ASIC including a licensing kit and webpage once all functions are operating in the new portal.

See: Media Release

Fintech

AUSTRAC releases statement on DCE registrations

On 29 April 2025, AUSTRAC released a statement encouraging inactive digital currency exchange (DCE) businesses to voluntarily withdraw their registrations, where inactive, to avoid cancellation.
DCEs, including cryptocurrency ATM providers, must be registered with AUSTRAC to legally offer services for exchanging cash for cryptocurrency. With 427 registered DCEs, AUSTRAC is concerned that many are inactive and is reaching out to those that appear to no longer be trading.

AUSTRAC's initiative aims to protect the community from harm by making it harder for criminals to launder money, improving the integrity of the DCE register. AUSTRAC can cancel registrations where there are reasonable grounds to believe a business is no longer providing DCE services. These cancellations will be published on their website. Businesses that wish to continue offering services must contact AUSTRAC, and those whose registrations are cancelled can re-apply if circumstances change.

See: Media Release

Other

AFCA releases Systemic Issue Insights Report

On 28 April 2025, AFCA published Edition 6 of its Systemic Issues Insights Report, covering issues identified and resolved in the first half of FY24-25 (Report). Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority (RG 267) requires AFCA to identify, refer and report systemic issues arising from complaints to the regulators.

The Report highlighted opportunities to improve practices across Australia's financial services sector, including that financial firms should:

• improve accessibility – provide 24/7 scam reporting channels, including digital and phone-based options;
• enhance response times – ensure prompt investigation and transaction recall efforts to minimise customer loss;
• strengthen fraud prevention measures – implement real-time scam alerts and educate customers on scam risks; and
• ensure clear communication – keep customers informed at every stage of the investigation.

See: Media Release

Authors: Narelle Smythe, Partner; Samantha Carroll, Partner; Lisa Simmons, Partner; Rehana Box, Partner; Con Tzerefos, Partner; Scott Charaneka, Partner; Hannah Glass, Special Counsel; Geena Davies, Senior Associate; Greg Patton, Senior Associate; Nicole Mazurek, Senior Associate; Kim Yen Nguyen, Senior Associate; Nicky Thiyavutikan, Senior Associate; Justin Ho, Senior Associate; Holly Marchant, Senior Associate and Nicholas Dennis, Senior Associate.