Financial Services and Credit Monthly Update January 2025
CONSUMER CREDIT
BNPL licensing information
On 17 January 2025, the Australian Securities and Investments Commission (ASIC) released INFO 285 Buy now pay later credit contracts: Credit licensing, which explains the new requirements for credit licensing commencing on 10 June 2025 for credit activities involving buy now pay later (BNPL) products.
CONSUMER PROTECTION
Fighting Scams Campaign
On 12 January 2025, the Federal Government announced the launch of the Fighting Scams Campaign, which includes the running of TV commercials and social media advertisements to raise awareness of scams. The campaign aims to convey three core messages:
STOP: before sharing personal information;
CHECK: that you know who you’re dealing with; and
PROTECT: against scams by taking actions like reporting them to Scamwatch.gov.au.
CORPORATE
Employee incentive schemes - proposed remake of relief
On 20 January 2025, ASIC announced that it was seeking feedback on remaking two employee incentive scheme class orders expiring on 1 April 2025: Class Order [CO 14/1000] Employee incentive schemes: Listed bodies, and Class Order [CO 14/1001] Employee incentive schemes: Unlisted bodies. ASIC proposes to combine the two class orders into one legislative instrument and continue the exemptions for five years. Comments close on 22 February 2025.
Consultation on relief for business introduction services
On 13 January 2025, ASIC commenced a consultation on extending the relief for business introduction services under ASIC Corporations (Business Introduction Services) Instrument 2022/805, which is due to expire on 1 April 2025, in relation to managed investment schemes, and reinstating previous relief from Chapter 6D of the Corporations Act 2001 (Cth) in relation to securities (except for debentures). Submissions can be made until 5 February 2025.
FINANCIAL SYSTEM
Review into Small and Medium-sized Banks – issues paper
The Council of Financial Regulators (CFR), in collaboration with the Australian Competition and Consumer Commission, is conducting a review of the small and medium-sized banking sector. The CFR has released an issues paper for the review. Responses are due by 7 February 2025.
SUPERANNUATION
New mandatory standards for superannuation industry
The Federal Government has announced that it will develop and implement mandatory and enforceable service standards for all large superannuation funds regulated by the Australian Prudential Regulation Authority (APRA). The new standards will initially seek to address critical areas with weaknesses reported in complaints data, including:
the timely and compassionate handling of death benefits;
fair and efficient processing of insurance claims; and
clear, respectful and accessible communications with members.
First publications of funds’ expenditure and insurance data
On 30 January 2025, APRA released its annual superannuation statistics publications for the 2023-24 financial year. As part of APRA’s effort to improve transparency in the industry, these publications are the first to contain information on both fund-level expenditures and detailed insurance data. This information will be included in all subsequent publications moving forward.
Trustees urged to strengthen anti-scam practices
On 29 January 2025, ASIC issued a letter to superannuation trustees urging them to review and strengthen their anti-scam and anti-fraud measures to mitigate risks for members. The letter distinguishes between scams and fraud (i.e. unauthorised transactions), and highlights trustees’ weaknesses in their anti-scam practices due to overreliance on anti-fraud measures. In the letter, ASIC provides guidance and a list of actions that trustees are requested to do in order to increase their anti-scam and anti-fraud capabilities.
APRA Deputy Chair remarks on board governance
On 30 January 2025, APRA Deputy Chair Magaret Cole delivered a speech at the Conexus Chair Forum on the topic of board governance in the superannuation industry. In her remarks, Ms Cole highlighted the importance of oversight over fund expenditure, investment and operational risk in light of APRA’s intensified scrutiny of trustees. Ms Cole urged entities to strengthen their governance, pointing out that poor governance practices had been observed in three broad areas:
funds’ operational risk and risk culture;
processes in relation to the nomination and appointment of directors; and
processes regarding board renewal and tenure by some entities.
AML/CTF
AUSTRAC publishes future law compilation of AML/CTF Act
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released a Future Law Compilation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) that reflects anticipated amendments from the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (AML/CTF Amendment Act) that mostly become effective from 1 July 2026. The compilation aims to help reporting entities and industry associations understand and prepare for the upcoming legislative changes.
AUSTRAC consults on new AML/CTF rules
AUSTRAC has published a consultation paper on new anti-money laundering and counter-terrorism financing (AML/CTF) Rules, together with an exposure draft of the proposed new rules, following the enactment of the AML/CTF Amendment Act. The draft of the new Rules covers AML/CTF programs, reporting groups (formerly ‘designated business groups’), customer due diligence, the ‘travel rule’, compliance reports, keep open notices (formerly ‘Chapter 75 notices’), and correspondent banking relationships. The submission deadline is 14 February 2025.
AUSTRAC proposes that the new rules will be called the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 and that some exemptions in the current AML/CTF Act will be retained in the existing AML/CTF rules, to be renamed the AML/CTF (Exemptions) Rules 2007.
DISPUTES AND ENFORCEMENT
Compensation Scheme of Last Resort post-implementation review
The Treasury is inviting submissions on the post-implementation review of the Compensation Scheme of Last Resort (CSLR), which was introduced to provide victims of financial services misconduct with access to redress and compensation within the scope of the scheme, after all other avenues have been exhausted. The review will consider:
how the CSLR is delivering on its intended objectives;
how the CSLR funding model is formulated, including its potential impacts on businesses who fund the industry levy;
how the powers of the CSLR Operator interact with delivery of the scheme; and
the current scope of the CSLR and any related matters.
AUSTRAC sues Entain Group for serious AML/CTF breaches
AUSTRAC has commenced proceedings in the Federal Court against Entain Group Pty Ltd (Entain), the operator of online betting sites such as Ladbrokes and Neds, alleging serious and systemic non-compliance with AML/CTF laws. This is AUSTRAC’s first court proceeding taken against a business operating online betting services. AUSTRAC’s allegations are that:
Entain’s management failed to have appropriate oversight of its AML/CTF program, which hindered its ability to identify relevant risks and its vulnerability to criminal exploitation;
Entain’s 24/7 online business operation created risks of enabling access and use of the services by persons unknown to Entain;
third parties accepted cash and other deposits on behalf of Entain to be credited into betting accounts in ways that could obscure proceeds of crime;
Entain failed to have appropriate controls to verify the identity of customers making the deposits and the source of those deposits; and
Entain failed to conduct appropriate checks on 17 higher risk customers, which includes allegations that Entain deliberately concealed the identity of some high-risk customers on its system through the use of pseudonyms.
Firstmac fined for DDO breach
The Federal Court has imposed a penalty of $8 million on Firstmac Limited (Firstmac) for failing to comply with its design and distribution obligations (DDO). The penalty decision followed the Court’s finding last year that Firstmac contravened its DDO for failing to take reasonable steps to ensure that the distribution of its High Livez investment product to its term deposit holders was consistent with the product’s target market determination.
BUSSQ judicial review application dismissed
The Federal Court has dismissed a judicial review application by BUSS (Queensland) Pty Ltd (BUSSQ). The application sought to set aside APRA’s decision to impose additional licence conditions on BUSSQ, which were announced on 14 August 2024. The conditions were to address prudential concerns regarding BUSSQ’s fitness and propriety processes and fund expenditure management. They require BUSSQ to engage an independent expert to review BUSSQ’s processes for assessing the fitness and propriety of its responsible persons and the processes for ensuring that expenditure is made in the best financial interests of members, and to make the findings of that independent review public.