Financial Services Snapshots

Financial Markets 

ASIC puts markets on notice about ASX trading service misuse

On 28 August 2025, ASIC, as part of its Market Integrity Update, released a warning to market participants against the misuse of ASX's Unintentional Crossing Prevention (UCP) service, upon recent observation of its improper use. 

The UCP is an optional ASX trading feature which market participants can use to prevent wash trading on ASX Trade and ASX24 platforms.  The UCP is not be relied upon for deliberate trading strategies of placing overlapping orders.  ASIC considers such use to be improper and may give rise to breaches of market integrity rules and market manipulation provisions.

ASIC urges that market participants should not solely rely on the UCP as a mechanism to prevent wash trades and must have in place the necessary controls to ensure that trading messages do not interfere with the efficiency and integrity of the market, including:

pre-trade filters for automated order processing that prevent orders which may self-execute from entering the market, post-trade alerts that detect wash trades, and

•qualified and experienced personnel to conduct pre-trade and post-trade reviews to identify unusual activity.

The ASX is currently updating its guidance and information regarding the UCP's functionality across trading phases.  ASIC will continue to monitor markets for misuse of the UCP or other trading services and will take action where appropriate.

See: Issue 170 – Market Integrity Update

Funds management

ASIC extends hardship withdrawals for frozen schemes

On 27 August 2025, ASIC announced the extension of ASIC Corporations (Hardship Withdrawals Relief) Instrument 2020/778 (Instrument) for a further 18 months.  The Instrument was due to sunset on 28 August 2025.

The Instrument permits the facilitation of withdrawals from schemes where a responsible entity has suspended withdrawals and ceased to allow the issue of new interests in the scheme for members facing financial hardship during the COVID-19 pandemic.  The Instrument allows responsible entities to grant hardship withdrawals to members if the member meets at least one of the hardship criteria including urgent financial hardship, unemployment, compassionate grounds and permanent incapacity. 

The extension is to allow ASIC to further consider and consult with key stakeholders on the effectiveness of the Instrument.  As a result, ASIC has decided to extend the relief until 28 February 2027.

Feedback by stakeholders is due by 31 October 2025. 

See: Media Release; Instrument

Banking

APRA consults on minor updates to prudential and reporting framework

On 25 August 2025, APRA launched a consultation regarding proposed minor amendments to its prudential and reporting standards applicable to authorised deposit-taking institutions (ADIs), insurers, and superannuation licensees.

The proposed changes are minor in nature and do not involve any material change to requirements.  Key aspects of the proposed updates include:

• CPS 001 Defined Terms:  The definition of 'APRA-authorised reinsurer' is clarified to apply solely to APRA-regulated entities.  The scope of entities considered for capital adequacy assessments at the Level 2 banking group is also clarified.
• GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers: Disclosure requirements are updated to require scheme documents related to insurance business transfers to be made accessible online, replacing the previous requirement for physical inspection.
• HRS 101 Regulatory Income Statement – Supplementary Information:  Terminology is updated to reflect current usage, including replacing outdated terms and clarifying that investment gains and losses encompass both realised and unrealised amounts.
• CPG 233 Pandemic Planning:  The prudential practice guide on pandemic planning is proposed to be retired, with pandemic scenario planning now incorporated within broader operational risk management requirements under CPS 230.

Feedback is due to APRA by 22 September 2025.  The finalised amendments are expected to come into effect from 1 January 2026.

See:  Media Release;  Consultation Letter 

RBA releases discussion paper on AI-powered tool for central bank business liaisons

On 28 August 2025, the RBA released a discussion paper introducing its new AI tool to enable more nuanced analysis of economic conditions.  The RBA's liaison program plays an important role in informing monetary policy decisions.  The relevant insights traditionally come from intelligence gathered over an extensive period and complement other statistics and data used to inform the RBA's assessment of economic conditions.

The AI powered tool can:

• rapidly search, process and analyse our vast collection of liaison meeting notes;
• integrate daily updates from other systems;
• use automated tagging of topics, tone and uncertainty;
• extract numerical data; and
• provide visualisations on trends over time.

The RBA consider these capabilities to be pivotal in assessing economic conditions, significantly improving the performance of nowcasts. 

See: Media Release; Discussion Paper

Payments

RBA releases Payments System Board Update for August 2025 

On 28 August 2025, the RBA released its notes from its recent Payment Systems Board Update.  Key issues discussed include:

• The system-wide resilience of the Australian payments system: The Board discussed the increasing significance of operational resilience, particularly given the heightened complexity and challenges associated with operational risk in the payments system.  It was noted that both regulators and industry participants need to place greater emphasis on understanding and managing system-wide interdependencies.
• The future of cash distribution arrangements: The Board addressed the necessity for industry collaboration to develop a more robust and durable cash distribution framework.  This would help ensure continued access to cash across the community, especially in rural and regional areas where cash remains a vital payment method and serves as an important contingency in the event of electronic payment disruptions, thereby supporting a resilient and inclusive payments environment.
• Global developments in stablecoins: The Board considered the recent growth in the stablecoin market on the global level, discussing the expansion in potential use cases for stablecoins, including as a means of payment and in cross-border transactions.

See: Media Release

Other

Government releases issue papers ahead of Economic Reform Roundtable

On 7 August 2025, Treasury published three issues papers in advance of the Economic Reform Roundtable, which took place from 19 to 21 August.  The Roundtable was convened to build consensus around key economic reforms, with the issues papers providing a factual basis for discussion.

The papers address the three central themes of the Roundtable: economic resilience, productivity, and budget sustainability and tax reform.  Each paper defines the relevant issues, highlights recent trends, and outlines the major challenges and opportunities facing the Australian economy.

The issues papers are intended to facilitate focused discussion at the Roundtable by clearly setting out the problems, allowing participants to concentrate on developing specific reform ideas.  

At this stage, Treasury has not yet provided an update on the outcomes of the Roundtable.

See:  Media Release;  Economic Reform Roundtable – Economic Resilience;  Economic Reform Roundtable – Productivity;  Economic Reform Roundtable – Budget Sustainability and Tax Reform

AFCA releases updated Financial Difficulty External Dispute Resolution Response Guide

On 14 August 2025, AFCA published an updated Financial Difficulty External Dispute Resolution (EDR) Response Guide (Guide).  The revised Guide clarifies expectations for financial firms handling financial hardship complaints, with a focus on clearer documentation, timely and appropriate responses to hardship notices, and stronger demonstration of compliance with the National Credit Code, industry codes, and AFCA's fairness principles. 

The Guide details the types of assistance that can be requested, such as loan term extensions, payment deferrals, or temporary payment reductions.  It also explains AFCA's process for handling complaints, including negotiation, conciliation, and assessment of whether financial firms have responded appropriately and in line with the National Credit Code and industry standards.

In the addition, the updated guidance addresses customer vulnerability and outlines required supporting information to ensure responses are thorough and transparent.  These updates aim to support fairer outcomes and more efficient complaint resolution.

See:  Media Release;  A guide to dealing with financial difficulty

APRA releases 2025-26 Corporate Plan

On 21 August 2025, APRA released its 2025-26 Corporate Plan, which is focused on safeguarding the stability and security of banks, insurers, superannuation trustees, and the wider financial system.  The plan sets out APRA's strategic direction for the next four years, alongside its policy, supervisory, and data priorities for the forthcoming 12 to 18 months.

The 2025-26 Corporate Plan is structured around four principal strategic objectives:  upholding financial and operational resilience;  addressing significant and emerging risks;  achieving an appropriate regulatory balance;  and enhancing APRA's organisational effectiveness.

Key strategic priorities identified in the plan include:

• enhancing cyber resilience across APRA-regulated sectors in response to the increasing frequency and sophistication of cyber-attacks, with a particular focus on risks linked to artificial intelligence and geopolitical developments;
• evaluating the extent to which regulated entities are meeting the requirements of APRA's new operational risk management prudential standard, CPS 230;
• reviewing and updating APRA's prudential standards relating to governance;
• publishing the findings of APRA's inaugural System Stress Test, which assesses risks stemming from the interconnectedness of the banking and superannuation sectors;
• increasing oversight of superannuation fund expenditure and conducting reviews of investment governance and member outcomes for major platform providers; and
• disclosing the results of APRA's Climate Vulnerability Assessment for the general insurance industry.

APRA's strategic initiatives highlight its commitment to maintaining a robust, transparent and contemporary prudential framework, ensuring the continued stability and resilience of Australia's financial system.

See: Media Release;  APRA Corporate Plan 2025-26

ASIC releases enforcement and regulatory update

On 28 August 2025, ASIC released its enforcement and regulatory update for January to June 2025 (REP 812).  Key focuses of REP 812 are as follows:

• Consumer Protection: ASIC has acted to uphold Australia’s credit laws, aiming to address predatory lending practices and misconduct by credit providers.
• Market integrity: ASIC’s efforts in this area have involved taking action against organisations for ongoing compliance breaches, such as misreporting, and placing emphasis on the governance, capability, and risk management of market operators.
• Improving regulatory compliance: ASIC has concentrated on ensuring adherence to new regulatory frameworks, including buy now pay later legislation and operational resilience requirements.

See: Media Release; REP 812