AFCA releases Systemic Issues Insights Report

AFCA has released its latest Systemic Issues Insights Report, urging AFSLs to shift from reactive monitoring to proactive, risk-based supervision. The ombudsman highlighted widespread deficiencies in advice quality, misleading representations, and weak representative oversight, noting that systemic failures often occur because AFSLs wait for customer complaints or external triggers rather than actively monitoring conduct. To mitigate risks, AFCA highlights that boards and executive teams should implement robust supervision frameworks, conduct regular client file quality audits, and establish direct board-level visibility over compliance metrics and remediation actions. More details: here.

Organisations affected: AFSL holders, Market Participants

Policies affected: Consider AFCA’s comments and if any updates may be required to Complaint Handling Policies and Procedures or Supervisory Procedures

APRA publish risk outlook

APRA has released its May 2026 System Risk Outlook, confirming that while Australia’s financial system remains fundamentally well-capitalised and resilient, regulatory oversight is intensifying due to escalating geopolitical and technological threats. APRA warned that the rapid, system-wide adoption of frontier artificial intelligence (AI) models is outpacing the maturity of corporate risk frameworks and accelerating cybersecurity vulnerabilities. To protect financial stability against severe economic and operational shocks, the regulator has sharpened its risk management expectations, urging banks, insurers, and superannuation trustees to actively uplift their cyber defences and embed offshore spillover assessments into their governance structures. More details: here.

Organisations affected: Although only applicable to banks, insurers, and superannuation trustees, this provides a good reminder for all AFSL holders

Policies affected: Cyber related

AUSTRAC outlines regulatory expectations for FY26/27

AUSTRAC has released its 2026–27 Statement of Expectations, shifting toward a risk-based approach that prioritises systemic risk reduction and high-quality reporting over regulatory perfection. Existing reporting entities must actively manage risks under the revised framework or maintain a documented implementation plan showing structured progress. While providing supportive guidance to compliant firms, AUSTRAC will target enforcement actions at entities demonstrating wilful blindness or ignoring enrolment mandates. More details: here.

Organisations affected: All reporting entities

Policies affected: Risk related policies and procedures

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