Financial Services Snapshots

Banking

APRA proposes streamlined IRB accreditation pathway for banks

On 23 October 2025, APRA announced proposals to simplify and clarify the process for banks seeking accreditation to use the internal ratings-based (IRB) approach for calculating credit risk-weighted assets. This initiative aims to make the IRB pathway more accessible, particularly for medium-sized banks that have previously found the process too resource-intensive.

The proposals form part of APRA's broader commitment, following the recent Council of Financial Regulators’ and Australian Competition and Consumer Commission’s Review into Small and Medium-sized Banks, to enhance competition and regulatory flexibility.

APRA invites written submissions in response to the consultation paper by 19 December 2025.

See: Media Release: Consultation Paper

APRA releases material service provider template

On 23 October 2025, APRA has published a material service provider register template, following its commitment outlined in the Response to submissions – CPG Operational Risk Management in June 2024.

The template has been designed in response to industry feedback and aims to assist regulated entities in clearly demonstrating the connections between their critical operations and the material service providers upon which they depend. APRA has indicated that use of this template is its preferred approach for entities to submit their registers, in line with the requirements set out in paragraph 51 of Prudential Standard CPS 230 Operational Risk Management (CPS 230).

Authorised deposit-taking institutions (ADIs), superannuation trustees, and insurers are required to complete and submit their material service provider registers to APRA by 1 October 2025.

See: Media Release; Operational Risk Management

Insurance

APRA refines proposals for easier access to alternative reinsurance arrangements

On 20 October 2025, APRA released a response paper detailing refinements to its proposed updates to the general insurance reinsurance framework (Response Paper). These changes are intended to make it easier for insurers to access a broader range of reinsurance options, including alternative arrangements such as insurance-linked securities, while maintaining robust protections for policyholders.

APRA is seeking further industry feedback on the draft prudential standards, guidance, and reporting requirements, with submissions due by 30 January 2026.

See: Media Release: Response Paper

Superannuation

ASIC identifies deficiencies in superannuation trustee retirement communications

On 14 October 2025, ASIC released Report 818 From superficial to super engaged: Better practices for trustee retirement communications (REP 818). REP 818 found that superannuation trustees are not adequately supporting members with retirement communications. Most trustees rely on generic communications, with limited tailoring for members already in retirement or for diverse and vulnerable groups.

The key findings are as follows:

• communications are primarily aimed at pre-retirees, with little adaptation for those in retirement;
• the needs of First Nations, vulnerable, and culturally and linguistically diverse members are largely unmet;
• many trustees lack formal processes to gather and act on member feedback; and
• trustees with strong governance and data capabilities deliver more effective communications.

As a result, ASIC has called on trustees to:

• focus on providing clear, relevant retirement information rather than product promotion;
• tailor communications to the needs of different member groups;
• ensure accessibility for all members, including those with disabilities and from diverse backgrounds; and
• strengthen governance and oversight of communication strategies and external providers.

See: Media Release

AML/CTF

AUSTRAC releases guidance to support AML/CTF reforms

On 17 October 2024, AUSTRAC published new guidance to assist both current and future reporting entities in complying with significant changes to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act).

From 1 July 2026, many additional businesses, including real estate agents, accountants, lawyers, and dealers in precious metals and stones, will be brought under the AML/CTF regime. For existing reporting entities, the new laws will take effect from 31 March 2026.

The guidance provides practical information to help businesses understand and implement their new obligations in a cost-effective manner that is scalable to the size and complexity of each business. It includes risk insights and indicators tailored to each newly regulated sector, as well as additional support for the digital currency exchange sector.

AUSTRAC flagged that there are further resources such as sector-specific guidance and starter kits for AML/CTF programs to be released.

See: Media Release; Reforms Guidance

Other

ASIC flags governance gaps and risks in offshore outsourcing

On 10 October 2025, ASIC released the findings of its review into the use of offshore service providers (OSPs) by financial advice licensees and responsible entities (REs) of registered managed investment schemes (the Review). The Review identified significant weaknesses in the governance and risk management of OSPs.

The key findings of the Review are as follows:

• wide variation in the quality of risk management for OSP arrangements, with some entities failing to implement adequate oversight;
• licensees remain fully responsible for their business operations, regardless of whether functions are outsourced directly or through intermediaries;
• inadequate supervision of OSPs increases risks to consumers and investors, including exposure to cyber incidents and loss of control over key business functions;
• critical outsourced functions, particularly those managed offshore, present heightened risks if not properly governed; and
• conflicting obligations may arise for OSPs subject to foreign laws, further complicating risk management.

ASIC has called on financial services entities to:

• strengthen governance and risk management frameworks for all outsourced functions, especially those performed offshore;
• ensure they have the skills and processes to independently assess and monitor OSP performance and suitability; and
• proactively review and address risks, including cybersecurity threats, to maintain public confidence in their operations and the broader financial system.

ASIC stated that it will continue to monitor the governance and risk management practices of financial services entities and take enforcement action where necessary to protect consumers and investors.

See: Media Release; Review of offshore outsourcing – Financial services advice licensees; Review of offshore outsourcing – Responsible entities