Bright Law | searchable regulatory information for Australian financial service providers

Superannuation consumer protection changes announced

David Jacobson — Thu, 20 Aug 2026 06:57:34 +0000

The Government has announced changes to strengthen consumer protections in the Australian superannuation, advice and investment system.

The changes will affect APRA-Regulated Superannuation funds as well as self-managed super funds, Managed Investment Schemes and financial advisers.

They will also include:
* Empowering the ATO to prevent rollovers to new SMSFs in situations where the ATO is investigating concerns of fraud, financial abuse, misconduct or potential harm.
* Introducing mandatory trustee education prior to SMSF registration, and requiring SMSFs to have a written investment strategy upfront.
* Banning unlicensed real-time communication with consumers about superannuation (lead generation), with targeted exemptions to protect advocacy, educational and employment communications.
* Giving the Auditing and Assurance Standards Board (soon to become External Reporting Australia) the power to make mandatory audit and assurance standards for auditors of Managed Investment Schemes compliance plans.
* Simplifying the Best Interests Duty reform of financial advice, by maintaining the existing obligation and safe harbour steps, and removing only the broadest safe-harbour step that is a barrier to scaled advice.
* Limiting Compensation Scheme of Last Resort payments to actual losses for applications made to AFCA after 30 June 2027, without any change to AFCA entitlements.
* All SMSFs will be included as CSLR Tier 3 levy payers in the waterfall model in future years when a special levy is required.

For APRA-Regulated Superannuation Funds, the changes include:
1 Legislation will impose an obligation on trustees to set and ensure compliance with caps on advice fee deductions from member accounts.
2. The Superannuation Industry (Supervision) Act will be amended to increase maximum civil penalties to 50,000 (up from 2,400 units) penalty units for core breaches of trustee obligations. A penalty unit is currently equivalent to $364.
3. Providing APRA with the power to set risk-based capital requirements for superannuation trustees offering higher-risk investment options to their members.
4. Providing ASIC with the power to direct superannuation trustees to commence a remediation process when an investment option fails and there is reason to suspect a failure of trustee obligations.
5. Introducing the New Class of Adviser regime to APRA-regulated superannuation and life insurance entities, supported by safeguards against vertical integration through prohibitions on commissions, bonuses and volume-based payments that are features of sales-driven advice models. This measure will be subject to a review three years after commencement to evaluate the scope and operation of the reform.

APRA’s powers
APRA has announced it would set capital requirements for trustees offering higher risk investment options. These requirements would seek to ensure trustees have the financial capacity to meet their obligations under the proposed compensation scheme.

APRA will consult on a package of reforms to lift investment governance standards and reduce the likelihood of member harm.

The proposals would strengthen requirements across eight areas covering the full investment management lifecycle.

The main proposals include:
• Ensuring that a trustee’s investment management capability is commensurate to the complexity of their investment menu;
• Addressing weaknesses in onboarding, monitoring and offboarding practices;
• Addressing material conflicts;
• Improving member-level diversification; and
• Strengthening trustee oversight and accountability.

The investment governance reforms would apply to all trustees.

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Author: David Jacobson
Principal, Bright Corporate Law
Email: djacobson@brightlaw.com.au
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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Unfair trading practices ban passed by Parliament

David Jacobson — Thu, 20 Aug 2026 06:56:36 +0000

The Australian Parliament has passed the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (Cth), to amend the Australian Consumer Law by banning unfair trading practices and subscription traps from 1 July 2027.

Unfair trading practices capture conduct in connection with the supply of, or an offer to supply, goods or services that manipulates the consumer and causes, or is likely to cause, detriment (whether financial or otherwise) to the consumer.

The changes strengthen protections against ‘drip pricing’ by requiring a person offering goods or services at a base price to disclose information relating to any applicable transaction-based charge that would apply to the supply of those goods or services.

The changes also require a person offering goods or services under a subscription contract to provide subscribers with certain pre-contract and ongoing information and an easy and straightforward way to end a subscription, including an online cancellation option in certain circumstances.

The reforms will not apply to the financial services sector for the time being, but the Government says it is working with the states and territories and the Australian Securities and Investments Commission to explore further alignment of protections within the financial services sector.

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Case notes: AML/CTF debanking

David Jacobson — Thu, 20 Aug 2026 06:55:28 +0000

Two recent cases have considered when financial institutions have declined, withdrawn or limited banking services to customers in certain industry sectors due to factors such as commercial considerations, reputational risk and regulatory risk exposure (“debanking”).

Although Austrac has issued guidance to reassure banks that there is no requirement in the AML/CTF Act or Rules to decline to provide designated services to whole industry sectors, notwithstanding a financial institution’s assessment of the industry sector’s relative risk, the courts have upheld debanking decisions which comply with customer contracts and banks’ risk appetites.

In Merciful Group Inc v Norfina Ltd t/as Suncorp Bank [2026] NSWCA 155 the NSW Court of Appeal dismissed an appeal from the NSW Supreme Court decision upholding a bank’s closure of a customer’s account following concerns raised through its AML/CTF risk assessments that the account was involved in money-laundering or terrorism financing activities.

Merciful is an Australian registered charity which provides aid to conflict-affected countries including Syria, Lebanon and Yemen. Suncorp’s internal systems had identified Merciful’s account as being of high AML/CTF risk.

Suncorp advised that Merciful’s account would be closed in accordance with cl 15.2 of the terms applicable to the account.

Clause 15.2 provided: “We [Suncorp] can close your Account immediately if… (c) to protect our legitimate interests; (d) we need to by law or to meet our prudential requirements.”

Merciful sought declarations that Suncorp was in breach of the agreement and an injunction restraining Suncorp from closing the account.

The Court of Appeal rejected the submission that it was not reasonable for Suncorp to close the account as it presupposed an obligation only to exercise the power to close the account if no lesser step is available.

The closure decision was supported by evidence of compliance with Suncorp’s AML/CTF program, its risk alerts and senior management review.

In Puleo v Bendigo and Adelaide Bank Ltd [2026] VSC 513 the Supreme Court of Victoria rejected a claim by the owners of a licensed brothel that in closing their accounts, the Bank:
(a) engaged in discrimination and breached the Equal Opportunity Act 2010 (Vic);
(b) breached the terms and conditions governing the operation of the accounts; and
(c) breached s 912A(1)(a) of the Corporations Act 2001 (Cth) as the decision to close the accounts was not made efficiently, honestly or fairly.

The customers also alleged that the clause permitting the Bank to close the Accounts under the Business Accounts Terms and Personal Accounts Terms was an ‘unfair term’ for the purposes of s 12BG(1) of the Australian Securities and Investment Commission Act 2001 (Cth) and should be declared void.

The Bank said that it decided to close the accounts to protect the Bank’s legitimate interests as it considered the customers to be outside the Bank’s risk appetite, as it could not adequately mitigate and manage the level of risk presented by continuing to provide banking and financial services to the customers.

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Case note: penalty for misleading conduct and false or misleading representations relating to financial products

David Jacobson — Mon, 03 Aug 2026 02:27:54 +0000

In Australian Securities and Investments Commission v Latitude Finance Australia (No 4) [2026] FCA 989, the Federal Court imposed penalties of $35 million against Harvey Norman Holdings Ltd and $20 million against Latitude Finance Australia for misleading conduct and false or misleading representations they made in a national advertising campaign promoting a 60-month interest free and no deposit payment method for goods purchased at Harvey Norman stores. Background.

Latitude and Harvey Norman failed to disclose in those advertisements that:
(a) an essential precondition for acquiring goods pursuant to the advertised payment method was that the consumer has or enters into a continuing credit contract linked to a credit card; and
(b) a consumer taking up the advertised payment method would, in addition to the purchase price, be required to pay a $25 establishment fee (during the period 1 January 2020 to 15 March 2021) and ongoing monthly account service fees, which since 1 January 2020 have increased from $5.95 per month to $10.95 per month.

The higher penalty imposed on Harvey Norman is likely to be appealed against.

Although Justice O’Bryan concluded that Harvey Norman and Latitude were equally responsible for the misleading advertisements, he considered that a higher penalty should be imposed on Harvey Norman in comparison to Latitude “to deter repetition and to motivate Harvey Norman to improve its compliance processes”.

In response to ASIC’s submission that Harvey Norman’s compliance culture was “particularly weak”, Justice O’Bryan observed:
“In relation to Harvey Norman, the evidence adduced with respect to its compliance systems and training can be described as paltry. No witness was called to give evidence about Harvey Norman’s compliance systems and training during the relevant period or presently….
Overall, Harvey Norman failed to establish that, during the relevant period, it had an effective system for seeking to ensure compliance with the consumer protection laws. That is a very serious matter for a company the size and scale of Harvey Norman, the principal business of which is the franchise of retail stores selling furniture, domestic appliances and computing and software products to the Australian public at large…
a striking feature of this case is Harvey Norman’s unwillingness, through a senior executive, to give evidence about Harvey Norman’s compliance procedures during the relevant period, why the procedures were inadequate to prevent the contravening conduct, and the steps that have been taken to prevent future contraventions. In the absence of such evidence, the apology from the bar table rings hollow…”

Referring to a press interview by Harvey Norman’s Chair, Justice O’Bryan observed:
“Mr Harvey is entitled to express his opinions, including about the legal system. However, Mr Harvey’s opinions indicate that the Chairman of Harvey Norman’s sole focus is upon the perceived injustice suffered by Harvey Norman, and a complete disregard for the potential harm suffered by consumers from Harvey Norman’s misleading conduct.
Taking the evidence as a whole, I am not persuaded that Harvey Norman has demonstrated any contrition for its wrongful conduct.”

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ASIC mortgage offset loan accounts report

David Jacobson — Mon, 03 Aug 2026 02:27:20 +0000

ASIC has published Report 837 Offsets (REP 837) containing the results of its review of the mortgage offset account practices of eight banks.

An offset account is a transaction account linked to an eligible home loan. The money in an offset account reduces the outstanding amount owed on the loan, which is used to calculate interest. By paying interest only on the net amount owed, offset accounts can significantly reduce interest costs over time and help customers repay their home loan sooner.

While practices varied significantly across the banks, ASIC found weaknesses in how all banks set up, monitored and managed offset accounts, resulting in some customers missing out on promised savings.

ASIC says the report is relevant for all banks.

Problems include banks linking accounts to the wrong home loan, not reducing interest charges as expected, and failing to respond to customer requests to open an offset account.

ASIC identified four key findings:

* Banks struggled to readily identify customer offset account requests – Many banks could not readily identify if, or when, customers had requested an offset account;
* Inconsistent detection of offset account failures – Some banks were unaware they were failing to deliver on promises to link offset accounts to home loans;
* Failure to compensate customers and slow to fix issues – Even when banks did identify potential offset account failures, some failed to adequately assess the extent of potential customer loss and compensate customers; and
* Lack of visibility of information on offset accounts for customers – Some customers had no easy way to confirm whether their offset account was set up, linked to the right loan and saving them interest, because they could not easily access key information in their bank’s mobile app.

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ASX Corporate Governance Principles draft 5th edition

David Jacobson — Mon, 03 Aug 2026 02:26:37 +0000

The ASX is consulting on a draft 5th edition of its Corporate Governance Principles and Recommendations.

The ASX says the draft 5th edition seeks to refine, but not redesign, the existing framework.

The ASX has kept the eight core Principles and reinforced the ‘if not, why not’ approach.

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Digital lead generation review

David Jacobson — Mon, 03 Aug 2026 02:26:05 +0000

The Australian Competition and Consumer Commission (ACCC) has published a report Unsolicited selling and lead generation which recommends that digital lead generation be explicitly captured within the rules governing unsolicited sales.

Lead generation is where a business uses a consumer’s personal information (‘leads’) either obtained themselves or through a third party to sell goods or services.

The ACCC says lead generation activity is increasing with the digital transformation and more marketing moving online.

Its market research indicated that respondents were actively engaging with marketing content and promotions on digital platforms where leads are often generated and salespeople and businesses use these leads to contact consumers.

It refers to the Australian Securities and Investments Commission’s (ASIC) recent investigations involving lead generation and consumer switching of superannuation funds to demonstrate the significant harm that can arise.

The unfair trading practices prohibition, which will commence on 1 July 2027, will give the ACCC and state and territory Australian Consumer Law regulators an additional tool to address problematic lead generation practices.

It says it is important that this prohibition be expanded to include financial products and services to provide ASIC with this additional tool, particularly in the context of unsolicited selling where the ACCC’s market research and submissions from consumer groups indicated that financial products such as Buy Now, Pay Later are often used.

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Add-on Insurance Deferred Sales Model extension

David Jacobson — Mon, 03 Aug 2026 02:25:27 +0000

ASIC is consulting on draft Regulations which extend the operation of the Deferred Sales Model (DSM) for add-on insurance class exemptions until 5 October 2031.

The Australian Securities and Investments Commission Regulations 2001 currently exempt certain classes of add-on insurance from the Deferred Sales Model regime.

The exemptions will expire on 5 October 2026. Background.

The DSM requires a four-day ‘pause’ between the sale of a principal product or service, such as a car, and the sale of an add-on insurance product which covers financial risks related to that principal product or service.

The effect of the Amending Regulations is that, for a further 5 years, insurers may sell the following classes of add-on insurance at the same time as the principal product or service:

* add‑on comprehensive motor vehicle or vessel insurance products;
* add‑on compulsory third party motor vehicle insurance products;
* add‑on home and contents insurance products;
* add‑on home building insurance products;
* add‑on landlord insurance products;
* add‑on limited motor vehicle or vessel insurance products;
* add‑on transport and delivery insurance products;
* add‑on travel insurance products;
* business‑related add‑on insurance products;
* superannuation‑related add‑on insurance products.

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Use of the word “bank” in Australia by foreign companies

David Jacobson — Mon, 03 Aug 2026 02:24:53 +0000

APRA has updated the exemptions from the section 66 Banking Act 1959 restriction on use of the word “bank”.

APRA’s Banking exemption No. 2 of 2026 allows foreign entities to use restricted terms when issuing debt securities in wholesale capital markets.

In addition to foreign banks, the list of exempt entities will also include:
* foreign bank holding companies;
* foreign bank treasury companies;
* multilateral development banks; and
* foreign subsidiaries of Australian banking groups.

The exemption is subject to the condition that these entities (or their parents or groups) must be prudentially regulated in their home country (excluding multilateral development banks). Foreign subsidiaries of Australian banking groups must have an Australian parent that is regulated by APRA.

Other foreign entities must individually seek APRA’s consent to be exempt from section 66 which will be granted on a case-by-case basis.

APRA’s guidelines on restricted terms have otherwise not changed.

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Is your Director and Officer Insurance adequate?

David Jacobson — Mon, 03 Aug 2026 02:24:11 +0000

When you consider the penalties, disqualification and costs orders imposed on the Star Entertainment executives in ASIC v Bekier, and the time and legal costs incurred by the defending non-executive directors, it is time to review your Director and Officer Liability cover to assess whether it is adequate and appropriate for a similar regulatory action.

One way of testing your cover is to do some worked examples of who is covered, what can’t be legally covered, and the monetary limits and cover exclusions.

Are CEO’s, CFO’s, company secretaries and other officers who are not directors covered?

You need to regularly confirm that your company has in place Directors’ and Officers’ Liability Insurance which gives you adequate protection in conjunction with the terms of the company’s Constitution and any indemnity deed, unless fraudulent or criminal activity or deliberate or reckless wrongful conduct is actually proven.

Insurance provides funds firstly for legal defence costs and secondly for the payment of fines and penalties, if legally permissible. These costs may be otherwise beyond the capacity of the company and its directors and officers. But insurance is unlikely to cover loss of income or the consequences of disqualification from managing a company.

Important questions
You need to know the answers to such questions as:

• Which “officers” are covered?
• Are you insured for legal defence costs?
• Are you insured for investigation costs?
• If so, are the amounts sufficient?
• Are you entitled to payment as legal defence costs are incurred (or in advance) or only as reimbursement? Is such payment by the insurer, if allowed by law, mandatory or discretionary? If mandatory, does the policy provide that legal defence costs will be paid within a specified time?
• Does the insurer reserve the right to recover any defence costs from the directors, officers or the company if it is subsequently established that they were not entitled to the defence costs advanced?
• Are you insured for compensation orders (if permitted by law)?
• Are you insured for civil pecuniary penalties (if permitted by law)?
• Are you covered only for costs involved in third party claims, or for costs in respect of disputes with the company as well?
• Is the insurance for a fixed amount per claim or for an aggregate amount of all claims in all types of cover under the policy in any one year?
• If the policy has an overall aggregate limit of liability covering all the different types of cover, are there are sub-limits or will a high claim in one area of the policy in one year limit the amount available in other areas of the policy in that year?
• What are the grounds for the insurer refusing cover?
• Is the policy available in the event of a company’s insolvency for the benefit of the company’s directors and officers (and not the company’s liquidator) and even if the company cannot pay the excess?
• Are the definitions of “Claim” (does it include an investigation?), Civil Liability”, “Loss” (does it include restitution or compensation?), “Investigation” and “Defence Costs”, as well as the Insuring Clause, wide enough?
• Are you insured after you cease your position with the company?

The answers to these questions will depend upon the specific definitions and wording of the policy and ultimately how they apply to the specific claim that is being made against you.

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Bright Law | searchable regulatory information for Australian financial service providers

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