Financial Services Snapshots

Financial Markets

RBA releases consultation on guidance for the Australian Clearing and Settlement Facility Resolution Regime

On 30 June 2025, the RBA released a consultation paper setting out proposed guidance for the Australian Clearing and Settlement (CS) Facility Resolution Regime.

This guidance outlines the circumstances and manner in which the RBA may exercise its new crisis resolution powers, following the enactment of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 in September 2024. It aims to assist CS facility participants and other stakeholders to understand the RBA's approach to resolution, as well as the possible implications for them should the RBA choose to exercise these powers.

It should be noted that the draft guidance does not have legal effect and does not bind the RBA to any particular course of action. In the event of any inconsistency between the guidance and the legislation, the provisions of the legislation will take precedence.

The RBA is now seeking feedback on the draft guidance prior to its finalisation. Submissions are open until 11 August 2025.

See: Media Release; Consultation Paper

Consumer Credit

APRA clarifies the treatment of Higher Education Loan Program debt obligations

On 19 June 2025, APRA issued its response letter following consultation on proposed changes relating to how ADIs consider Higher Education Loan Program (HELP) debt when assessing home loan applications. The letter sets out APRA's response to the issues that arose from the submissions to the consultation and is accompanied by the final revised Reporting Standard ARS 223.0 Residential Mortgage Lending (ARS 223.0) and Prudential Practice Guide APG 223 Residential Mortgage Lending (APG 223).

The key takeaways from APRA's responses are as follows:

• ADIs should assess each borrower's individual circumstances when deciding whether to exclude HELP debt repayments from serviceability assessments, using a 12-month repayment timeframe as a benchmark for what APRA considers reasonable;
• provided an ADI has robust processes in place and has positively assessed a borrower's ability to meet their obligations, taking into account the remaining term of HELP debt, loans approved by overriding internal policy to exclude HELP repayments may still be classified as standard for capital purposes;
• loans approved under the serviceability guidance must be reported as exceptions, as they do not meet existing serviceability standards and need to be monitored by both ADIs and APRA;
• APRA cannot specify a target level of exceptions for housing lending, as this depends on each ADI's risk appetite and business strategy, but the level should remain prudent and limited to preserve the integrity of core lending policies; and
• allowing the removal of HELP debt from the Debt-to-Income reporting definition to be optional would undermine efforts to maintain consistency across the industry.

The revised ARS 223.0 comes into effect on 30 September 2025. ADIs are required to comply with the updated reporting requirements for the September 2025 quarter.

See: Media Release; Response Letter; ARS 223.0; ARS 223

Insurance

AFCA publishes two approaches to general insurance complaints

On 27 June 2025, AFCA announced the publication of two approaches to general insurance complaints, following consultation with stakeholders.

The updated approach to non-disclosure and misrepresentation now reflects legislative changes made since its last version, including amendments to the Insurance Contracts Act 1984 (Cth) that came into effect in 2021.

AFCA has also introduced a new approach to the duty to take reasonable care not to make a misrepresentation, which outlines how it will consider complaints involving the duty to take reasonable care not to make a misrepresentation in general insurance.

AFCA has released its final AFCA Approach documents, which can now be accessed on its website. Alongside these documents, a consultation feedback report has also been published, detailing how AFCA addressed formal submissions and stakeholder input.

See: Media Release; AFCA Approach to non-disclosure and misrepresentation; AFCA Approach to the duty to take reasonable care; Joint Consultation Feedback Report

Payments

RBA and Treasury welcome industry consultation on the future of the account-to-account payments systems

On 2 July 2025, the RBA and Treasury welcomed the release of a public consultation by Australian Payments Network and Australian Payments Plus on the future of the account-to-account (A2A) payments system.

A clear, public interest-driven vision for A2A payments is a key recommendation from the recent RBA Risk Assessment regarding the proposed decommissioning of the Bulk Electronic Clearing System. In support of this, the RBA has released a paper setting out a public interest framework for A2A payments, which this consultation is designed to reflect.

This consultation seeks input on the current and future payments needs and expectations of the users of Australia’s A2A payments system, including consumers, businesses and governments. It also invites feedback from financial institutions, payment intermediaries, regulators, and other stakeholders.

Submissions are open until 31 July 2025, providing an important opportunity for stakeholders to contribute to the development of a secure and efficient payments system for Australia.

See: Media Release; Consultation Paper; RBA Risk Assessment; Public Interest Framework

Other

ASIC gives further relief for licensees under the reportable situations regime

On 27 June 2025, ASIC announced the introduction of targeted relief for AFS and credit licensees under the reportable situations regime – the third tranche of relief since the regime began in 1 October 2021. ASIC made ASIC Corporations and Credit (Amendment) Instrument 2025/289 (Instrument), which provides additional relief from reporting breaches of the misleading and deceptive conduct provisions, and certain contraventions of civil penalties where:

• the breach has been completely rectified within 60 days from when it first occurred (this includes paying any necessary remediation);
• the number of impacted consumers does not exceed 10;
• total loss across all impacted consumers (including where the loss has been remediated) does not exceed $1000; and
• the breach is not a contravention of the client money reporting rules and clearing and settlement rules.

In addition, through the Instrument, ASIC has also:

• extended the length of investigations that are reportable to ASIC from 30 days to 60 days; and
• clarifies that a report is taken to be lodged with ASIC, if a licensee has submitted a breach report to APRA that contains all the information APRA has requested.

These changes aim to ease the reporting burden on licensees while preserving the fundamental objectives of the regime. This is a reminder for licensees to ensure they have effective systems and processes in place to identify, escalate, investigate, rectify and record incidents and breaches as part of their general obligations.

See: Media Release; Instrument

APRA's new prudential standard on operational risk management comes into force

On 1 July 2025, Prudential Standard CPS 230 Operational Risk Management (CPS 230) came into effect. CPS 230 require APRA-regulated entities to:

• identify important business services and assess their ability to continue during severe disruptions;
• test business continuity plans to uncover and address vulnerabilities; and
• strengthen third-party risk management by identifying and managing risks from material service providers.

These higher standards came into force on 1 July 2025. Where an APRA-regulated entity has pre-existing contractual arrangements in place with a service provider, the requirements under CPS 230 will apply in relation to those arrangements from the earlier of the next renewal date of the contract with the service provider or 1 July 2026.

See: Media Release; Prudential Standard CPS 230 Operational Risk Management

APRA releases CPS 230 notification forms

On 27 June 2025, APRA developed and released electronic forms for entities to use when notifying APRA of the following matters, in order to comply with the notification requirements under Prudential Standard CPS 230 Operational Risk Management:

• Operational Risk Incident (paragraph 33);
• Breach of Critical Operation Tolerance (paragraph 42); and
• New or change to a material arrangement and/or offshoring (paragraph 59 (a) and (b)).

Once submitted, APRA will contact entities directly should any further information be required. The electronic forms are also available on APRA's website.

See: Media Release; Prudential Standard CPS 230 Operational Risk Management

Authors: Corey McHattan, Partner; Jonathan Gordon, Partner; Hong-Viet Nguyen, Partner; 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.