Financial Services and Credit Monthly Update March 2025
CONSUMER CREDIT
BNPL regulations
The National Consumer Credit Protection Amendment (Low Cost Credit) Regulations 2025 (Cth) were issued on 7 March 2025. The regulations support the amendments to the credit legislation to regulate buy now pay later (BNPL) credit which will come into effect in June 2025.
Updated ASIC guidance on student loans and responsible lending
On 6 March 2025, the Australian Securities and Investments Commission (ASIC) updated its regulatory guidance to clarify the treatment of Higher Education Loan Program (HELP) and other student loan commitments by banks and lenders. The update to Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) follows a request from the Treasurer and consultations with industry and consumer groups. The revised guidance acknowledges that HELP debts differ from other forms of debt due to income-contingent repayments. It aims to provide clarity on how lenders may consider HELP debts in responsible lending assessments.
ASIC warns payday lenders on compliance
ASIC has issued a warning to payday lenders following a review of compliance with small amount credit contract obligations. ASIC’s Report 805 Falling short: Compliance with the small amount credit contract obligations highlights concerns that some lenders may be shifting vulnerable consumers into contracts with fewer protections. The review covered changes from the Financial Service Reform Act 2022 (Cth) and found instances of unsuitable contracts and inadequate target market determinations.
CONSUMER PROTECTION
New Banking Code of Practice
The Australian Banking Association has launched a new Banking Code of Practice (the Code), which took effect on 28 February 2025. The updated code introduces several key provisions aimed at strengthening customer protections, particularly for small businesses, guarantors, and vulnerable customers.
A notable change is the expansion of the small business definition. The Code also includes new obligations for banks to meet with potential guarantors to ensure they understand their commitments before accepting guarantees.
In addition, the Code introduces a new definition of vulnerable customers, acknowledging that vulnerability can affect anyone at any time. It also outlines enhanced support for customers facing financial difficulties. Other key features of the Code include new provisions for managing deceased estates and commitments to provide or refer customers to free support services such as interpreters and AUSLAN.
Significant reduction in recorded scam losses
The Australian Competition and Consumer Commission (ACCC) has reported a significant reduction in scam losses, with annual losses falling by over $1 billion in the past two years. The National Anti-Scam Centre's latest Targeting Scams Report revealed a 25% decrease in scam losses, totalling $2 billion in 2024. This decline follows the Federal Government's $180 million investment in anti-scam initiatives, including the establishment of the National Anti-Scam Centre, the implementation of a Scams Prevention Framework, and the creation of a mandatory SMS sender ID register.
AFCA’s increased scams powers
A new ministerial direction will empower the Australian Financial Complaints Authority (AFCA) to investigate the culpability of receiving banks in scam cases, enhancing pathways for victim compensation and redress. The change becomes effective in 12 months. Currently AFCA can only investigate actions of the scam victim’s transferring bank, which has a direct customer relationship with the scam victim.
Extension of unfair trading practices to small businesses
On 14 March 2025, the Federal Government announced plans to extend proposed unfair trading practice protections to small businesses. This decision follows consultations revealing that small businesses, like consumers, face significant power imbalances when dealing with larger enterprises. The new protections will address unfair practices in sectors such as construction, agriculture, and retail, where small businesses often experience substantial harm. The Treasury will consult on the design of these protections, considering a principles-based prohibition and targeting specific unfair practices.
COMPETITION
Ban on non-compete employment clauses announced
On 25 March 2025, the Federal Government announced plans to ban non-compete clauses for most workers, aiming to boost wages and productivity. The ban will apply to workers earning less than the high-income threshold under the Fair Work Act 2009 (Cth), currently $175,000. The reforms are expected to lift wages by up to 4%, or approximately $2,500 annually for median wage earners, and add $5 billion to GDP each year. The Government will consult on policy details, including exemptions and penalties, with the changes set to take effect from 2027.
Draft merger assessment and process guidelines
On 20 March 2025, the ACCC published draft merger assessment guidelines for consultation, a step towards the new merger regime set to commence on 1 January 2026. The guidelines outline the analytical framework that the ACCC will use to assess notified acquisitions, reflecting best practices in competition assessments. Key elements include the clarification that the "substantial lessening of competition" test encompasses the creation, strengthening, or entrenchment of market power. In addition, the cumulative effect of serial acquisitions over the preceding three years will now be considered in merger decisions. The consultation closes on 17 April 2025.
On 27 March 2025, the ACCC also released draft guidance on the processes it will use to assess acquisitions under Australia's new merger regime. The guidance aims to assist businesses, advisers, and stakeholders in understanding and engaging with the new requirements taking effect on 1 January 2026. The draft guidelines, along with a simpler quick guide, outline the notification thresholds and assessment procedures. The ACCC expects to approve around 80% of acquisitions within 15 to 20 business days, with contentious mergers undergoing in-depth scrutiny. Submissions on the draft guidance can be made until 28 April 2025.
Consultation on draft merger notification thresholds
On 28 March 2025, the Federal Government released an exposure draft of the Competition and Consumer (Notification of Acquisitions) Determination 2025 for public consultation. This follows the enactment of the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024 (Cth) on 10 December 2024. The draft instrument outlines the merger notification thresholds and additional targeted requirements for major supermarkets, set to commence from 1 July 2025. Consultation closes on 2 May 2025.
CORPORATE
Changes to the Franchising Code of Conduct
Key changes to the Franchising Code of Conduct become effective from 1 April 2025. On 11 March 2025, the Treasury published a table outlining the changes. The remade Code introduces simpler rules and formatting, streamlined pre-entry and renewal processes, and faster termination for serious misconduct. Enhanced protections for franchisees and new measures to encourage good behaviour are also included. In addition, changes to the Franchise Disclosure Register will require franchisors to complete new profile fields, and previously uploaded Key Facts Sheets and Disclosure Documents will no longer be publicly viewable.
ASIC Chair highlights unchanging duties amid regulatory complexity
On 12 March 2025, ASIC Chair Joe Longo addressed the Australian Institute of Company Directors Australian Governance Summit, emphasising that directors' foundational duties remain unchanged despite increasing regulatory complexity: directors must continue to act in good faith, in the best interests of the company, and with due care and diligence. Mr Longo highlighted the need for regulatory simplification and announced the formation of a Simplification Consultative Group to address these challenges. The group aims to streamline ASIC's regulatory guidance and identify priority law reforms. Mr Longo also emphasised the importance of enhancing board composition with technical expertise and improving the management-board relationship.
DIGITAL ASSETS
Digital asset industry reforms
The Federal Government has announced its strategy to foster an innovative digital asset industry, focusing on digital assets, payment systems, and stablecoins. The reforms aim to enhance transparency, protect consumers, and ensure Australia leverages on new technology and remains competitive globally. Key initiatives include collaborating with ASIC and industry stakeholders to facilitate a smooth transition to the new regulatory settings. The Government plans to consult on draft legislation throughout 2025, using the existing Australian financial services framework to provide consistent oversight and robust consumer safeguards.
On 21 March 2025, the Federal Government also published its response to the Board of Taxation’s review of the tax treatment of digital assets and transactions. The review examined the current tax framework for digital assets, including cryptocurrencies, and proposed changes to ensure clarity and fairness in taxation. The Government's response outlines its approach to implementing these recommendations, aiming to provide certainty for taxpayers and support the growth of the digital economy.
ESG
Sustainability reporting regulatory guide
On 31 March 2025, ASIC published Regulatory Guide 280 Sustainability reporting (RG 280). RG 280 provides detailed guidance for entities required to prepare sustainability reports under Chapter 2M of the Corporations Act 2001 (Cth). The guide covers the determination of reporting obligations, required content, and the disclosure of sustainability-related financial information. RG 280 includes guidance on climate scenario analysis, scope 3 greenhouse gas emissions, and specific advice for directors. It also outlines ASIC’s approach to supervision and enforcement, including the use of its new directions power.
ASIC has also issued relief to allow stapled entities to prepare consolidated sustainability reports and provided additional information for entities within the value chain. The new requirements will be phased in over three years, starting with the first reporting cohort for financial years commencing on or after 1 January 2025.
FINANCIAL ADVICE
Consultation on financial advice reforms
The Federal Government has released draft legislation for the next phase of its financial advice reforms, open for consultation until 2 May 2025. Key proposals include replacing the statement of advice with a more practical client advice record, establishing clear rules for advice fees charged via superannuation, and allowing superannuation funds to provide targeted prompts to members at key life stages. The reforms aim to enhance the accessibility and quality of financial advice.
FINANCIAL PRODUCTS
ASIC remakes relief instrument for 31-day notice term deposits
ASIC has remade the legislative instrument providing relief for 31-day notice term deposits, effective from 28 March 2025. The new ASIC Corporations (31-day Notice Term Deposits) Instrument 2025/172 continues the relief previously granted under Class Order [CO 14/1262], which was due to sunset on 1 April 2025. The instrument allows 31-day notice term deposits of up to five years to be treated as 'basic deposit products' under the Corporations Act 2001 (Cth). The remade instrument introduces an option for authorised deposit-taking institutions to issue a combined pre- and post-maturity notice, which must be provided to customers between five and ten business days before maturity. Additionally, the instrument permits electronic delivery of notices.
FINANCIAL SYSTEM
Consultation on proposed supervisory levies for 2025-26
On 27 March 2025, the Federal Government released a discussion paper seeking feedback on the proposed financial institutions supervisory levies for the 2025–26 financial year. These levies, collected by the Australian Prudential Regulation Authority (APRA), aim to recover operational costs and specific expenses incurred by Commonwealth agencies, including Treasury and the Australian Taxation Office. The consultation period runs until 25 April 2025.
FOREIGN INVESTMENT
Foreign investment framework reforms
The Federal Government has published revised Guidance Notes on foreign investment to reflect recent reforms. The Guidance Notes provide clarity on foreign investment in Build to Rent developments, eligibility criteria for partial refunds of application fees, and stricter scrutiny of tax arrangements.
Additionally, a ban on foreign purchases of established dwellings commences on 1 April 2025, and a stronger compliance approach to land banking will be adopted by the Government.
PAYMENTS
RBA assesses risks in decommissioning BECS
On 11 March 2025, the Reserve Bank of Australia (RBA) released a risk assessment regarding the proposed decommissioning of the Bulk Electronic Clearing System (BECS). The assessment highlights the lack of a unified vision for the future of account-to-account payments and insufficient industry coordination. BECS is a critical system for payments such as welfare, salaries, and bills, and is set to be phased out by June 2030. The RBA's recommendations include defining a clear vision, considering alternative options, and establishing a comprehensive transition plan. The RBA will oversee the implementation of these recommendations to ensure a smooth transition and maintain public confidence in the financial system.
PRIVACY AND DATA
Credit Reporting Code changes for reviews
The Australian Privacy Commissioner has approved a variation to the Privacy (Credit Reporting) Code 2024. On 24 March 2025, the new Privacy (Credit Reporting Code) 2025 took effect. The variation amends the independent review provisions in the Code. These require the Commissioner to initiate an independent review of the Code every 4 years. Under the new Code, the Commissioner may defer an independent review of the Code by up to 2 years, if stakeholder consultation has taken place.
Cyber Security Rules
On 4 March 2025, the Federal Government registered three new Cyber Security Rules to implement certain measures under the Cyber Security Act 2024 (Cth) including mandating minimum security standards for smart devices, requiring businesses to report ransomware payments, and establishing a Cyber Incident Review Board. The Cyber Security (Security Standards for Smart Devices) Rules 2025 will take effect in March 2026, while the Cyber Security (Ransomware Payment Reporting) Rules 2025 and Cyber Security (Cyber Incident Review Board) Rules 2025 will commence on 30 May 2025.
CDR to expand to non-bank lenders in 2026
On 3 March 2025, the Federal Government announced the expansion of the Consumer Data Right (CDR) to include non-bank lending providers under the Competition and Consumer (Consumer Data Right) Amendment (2025 Measures No. 1) Rules 2025 which commenced on 4 March 2025. There will be a phased introduction of CDR to non-bank lenders in 2026.
The Federal Government has also updated its quick reference guide to assist entities navigate documents in the CDR legislative framework.
PRUDENTIAL
APRA proposes significant updates to prudential governance framework
APRA has released eight proposals to enhance the governance framework for banks, insurers, and superannuation trustees. This marks the first significant update to APRA's governance standards in over a decade. Key changes include:
raising the bar for board skills and experience;
tightening standards for the fitness and propriety of responsible persons;
extending conflict of interest management requirements to the banking and insurance sectors;
introducing a lifetime tenure limit of 10 years for non-executive directors; and
strengthen board independence, particularly for entities within a group.
The proposals aim to streamline the governance framework by eliminating redundant requirements and creating a unified set of prudential standards across all APRA-regulated industries. A three-month consultation period will gather feedback from stakeholders, with updated standards expected to be published by early 2027 and implemented by 2028. Consultation closes on 6 June 2025.
APRA highlights strategic risks for mutual banks
On 14 March 2025, Therese McCarthy Hockey, APRA Member for Banking, delivered an address to the COBA CEO and Directors Forum, emphasising the growing importance of strategic risk management for mutual banks. Highlighting the sector's increased market share in housing lending, she noted that mutuals must adapt to evolving customer preferences and technological advancements to remain competitive.
Key points included the necessity for mutuals to invest in digital capabilities to attract younger customers, the impact of overseas economic disruptions, and the critical need for robust governance and skilled boards. Ms Hockey also emphasised the importance of recovery and exit planning, citing APRA's new prudential standard CPS 190, which mandates detailed crisis management strategies. The speech concluded with a call for mutuals to explore innovative solutions, such as partnerships and mergers, to achieve operational scalability and ensure long-term sustainability in a rapidly changing financial landscape.
Minor changes to reporting standards
On 19 March 2025, APRA announced minor amendments to several superannuation reporting standards including the SRS 101.0 Definitions for Superannuation Data Collections, SRS 553.0 Investment Exposure Concentrations and Valuations, and SRS 606.0 RSE Profile. These updates aim to align the standards with the APRA Connect taxonomy and clarify reporting requirements.
SUPERANNUATION
Consultation on payday super legislation
On 14 March 2025, the Federal Government published draft legislation that will require employers to pay superannuation on payday, effective from 1 July 2026. The Australian Taxation Office (ATO) estimates that $5.2 billion worth of super went unpaid in 2021–22. The new law will streamline payroll processes, redesign the Superannuation Guarantee charge, and impose stricter penalties for unpaid super. Consultation on the draft legislation is open until 11 April 2025.
ASIC report highlights failures in death benefit claims handling
On 31 March 2025, ASIC released a report detailing significant deficiencies in the handling of death benefit claims by superannuation trustees. The report, based on a review of 10 trustees representing 38% of member benefits, identified issues such as excessive delays, poor customer service, and ineffective claims handling procedures. Major findings include that none of the reviewed trustees monitored or reported on their end-to-end claims handling times. The report also highlighted that 78% of claim files had delays caused by processing issues within the trustee’s control, and 27% of files exhibited poor customer service.
ASIC has issued 34 recommendations for trustees to improve their practices, including better customer service, faster response times, and enhanced support for First Nations members and vulnerable claimants. ASIC will monitor trustees' progress in implementing these recommendations.
TAXATION
Clarification on managed investment trusts tax arrangements
On 13 March 2025, the Federal Government announced proposed amendments to income tax laws to ensure legitimate investors can continue accessing concessional withholding tax rates while preventing misuse. The changes reaffirm that genuine, foreign-based widely-held investors, such as pension funds, can still benefit from these rates through managed investment trusts (MITs). The amendments clarify that trusts ultimately owned by a single widely-held investor are eligible for MIT concessions, maintaining current industry practices. This measure complements a tax alert issued by the ATO on 7 March 2025, which warns against non-commercial restructures to exploit MIT benefits. The amendments do not affect the ATO's authority to use the General Anti-Avoidance Rules in cases of misuse.
AML/CTF
Tipping off reforms commence
On 31 March 2025, amendments to the offence for "tipping off" came into effect under section 123 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). The key change is that the tipping off offence will now only arise where the disclosure would or could reasonably be expected to prejudice an investigation by law enforcement agencies. The amendments also expand the categories of persons who may commit the offence, including current and former employees and agents of a reporting entity. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has published guidance on the tipping off offence reforms to help entities understand and comply with the changes to tipping off.
AML/CTF reform webpage
AUSTRAC has published an AML/CTF reform webpage which is a useful starting point for information about the 2024 changes to the AML/CTF Act, most of which will come into effect in 2026.
Crypto ATM providers on notice
AUSTRAC has issued a warning to cryptocurrency ATM providers, highlighting deficiencies in their anti-money laundering and counter-terrorism financing measures. An AUSTRAC internal taskforce established in December 2024 has identified concerning trends and suspicious activities linked to these machines. The taskforce has been actively engaging with businesses to assess compliance and understand sector-specific risks. Australia now hosts approximately 1,600 crypto ATMs, a rapid increase from just 23 in 2019. The majority of transactions involve cash deposits to purchase Bitcoin. AUSTRAC's findings indicate that some transactions may be associated with scams or fraud. AUSTRAC says that it will take action against non-compliant operators.
DISPUTES AND ENFORCEMENT
AustralianSuper sued over death benefit delays
ASIC has initiated legal proceedings against AustralianSuper Pty Ltd (AustralianSuper), the trustee of Australia’s largest superannuation fund, for significant delays in processing death benefit claims. ASIC alleges that between 1 July 2019 and 18 October 2024, AustralianSuper failed to process nearly 7,000 death benefit claims efficiently, honestly, and fairly. In some cases, payments were delayed by up to 1,140 days despite having all necessary information. ASIC also claims that AustralianSuper failed to promptly pay benefits for at least 752 members. The regulator is seeking penalties, declarations, an adverse publicity order, and compliance orders. This action follows a similar case against United Super Pty Ltd in November 2024.
ASIC sues FIIG Securities for cybersecurity failures
ASIC has filed a lawsuit against FIIG Securities Limited (FIIG) for systemic cybersecurity failures over more than four years. ASIC alleges that from March 2019 to June 2023, FIIG failed to implement adequate cyber risk management systems, leading to the theft of approximately 385GB of confidential data. FIIG’s failures, undetected for nearly three weeks between 10 May and 8 June 2023, allowed a hacker to compromise personal information of around 18,000 clients, including sensitive details such as names, addresses, and bank accounts. ASIC is seeking declarations of contraventions, civil penalties, and compliance orders against FIIG.
APRA varies BUSSQ’s licence conditions
APRA has announced variations to the additional licence conditions imposed on BUSS (Queensland) Pty Ltd, trustee for The Building Unions Superannuation Scheme (Queensland) (BUSSQ). Initially imposed on 13 August 2024, these conditions require BUSSQ to appoint an independent third party to review its fit and proper processes and expenditure management practices. The variations update compliance timeframes, provide additional operational details, and enable immediate commencement of the required work. This follows the Federal Court's dismissal of BUSSQ’s judicial review application and BUSSQ’s subsequent decision to discontinue its appeal.
Active Super penalised $10.5 million for greenwashing
On 18 March 2025, the Federal Court has imposed a $10.5 million penalty on Active Super for greenwashing misconduct. The court found that Active Super misled investors by falsely claiming to exclude certain high-risk investments, such as gambling, coal mining, and oil tar sands, from its portfolio. Despite these claims, Active Super held investments in companies like SkyCity Entertainment Group, Gazprom, Shell, and Whitehaven Coal. The misleading conduct spanned approximately two and a half years, affecting investor confidence in ESG programs. Justice O’Callaghan highlighted the seriousness of the contraventions and the failure of Active Super’s senior management to ensure accurate representations. This case is ASIC’s third successful greenwashing court action.
ASIC’s actions upheld against Sunshine Loans
On 24 March 2025, the Federal Court ruled in favour of ASIC in two appeals involving small amount lender, Sunshine Loans. The first appeal, lodged by Sunshine Loans, challenged a prior decision that the lender had breached the National Credit Code by imposing unlawful fees on small amount credit contracts. The Court unanimously dismissed all grounds of appeal. The second appeal, initiated by ASIC, contested the recusal of Justice Derrington from the penalty hearing due to apprehended bias. The Court found that the primary judge erred in treating the penalty hearing as separate from the liability hearing. Consequently, the matter will return to Justice Derrington for determination of the appropriate penalty.
ASIC launches review of motor vehicle finance sector
On 19 March 2025, ASIC announced the launch of a comprehensive review of the motor vehicle finance sector. The initiative aims to enhance consumer outcomes, particularly for those in regional and remote areas, including First Nations communities. The review will scrutinise the compliance practices of lenders, brokers, and intermediaries, focusing on loan defaults, hardship practices, and dispute resolution processes. ASIC will examine the operations of seven lenders and identify brokers and intermediaries for inclusion as the project progresses. Initial insights from the review are expected in the second half of 2025, with a detailed public report to follow.
RBA and ASIC take action on ASX operational failures
On 31 March 2025, the RBA and ASIC announced measures to address ongoing operational risk management concerns at the ASX, following the CHESS batch settlement failure on 20 December 2024. The regulators expressed deep concerns over ASX's ability to reliably service the Australian equities market until the CHESS system is replaced.
The RBA downgraded ASX Clear Pty Limited and ASX Settlement Pty Ltd's compliance with the "Operational Risk" standard from “partly observed” to “not observed”. Additionally, ASIC directed ASX to engage an expert for a technical review of CHESS under section 823BB(4) of the Corporations Act 2001 (Cth).
The regulators emphasised the need for immediate remediation of the issues that caused the incident and warned of potential further regulatory actions if not addressed urgently. This includes leveraging the regulators’ new powers under recent reforms to the regulatory framework for financial market infrastructure, which came into effect in September 2024.