ASIC’s supervisory priorities for 2026-27: a clear focus for the year ahead

New activities

Use of AI by banks including poor governance and risk assessment practices. ASIC will be conducting a review of AI use in the banking sector focussed on new and proposed use cases and their impact on consumers.

Commencing Q2 2026-27.

This priority follows from ASIC Report 798 Beware the gap: Governance arrangements in the face of AI innovation (REP 798), which highlighted the increased adoption of AI and the lagging of governance and risk assessment frameworks.

Review governance processes, business methodologies and disclosure practices in relation to AI use, and enhance them, when necessary, to ensure consumer protection is maintained.

Consider implementing, if not already in place, an AI usage policy that clearly articulates how AI can be used, who is responsible and what rules need to be followed. 

NB. It is also critical to consider adjacent regulatory developments occurring in tandem. For example, from 10 December 2026, new Australian privacy obligations requiring transparency when using computer programs to inform decisions will come into force under Australian Privacy Principles 1.7-1.9.

Lending practices and broker oversight. ASIC will conduct a review of lender conduct, including short-term variable remuneration arrangements and the use, engagement and oversight of mortgage brokers and introducers.

Commencing Q3 2026-27.

This priority follows AUSTRAC’s investigation into mortgage loan fraud and industry calls for stronger measures to prevent fraudulent activity.

Assess current fraud prevention controls and address any identified deficiencies.

Assess policies and procedures for referral arrangements and brokers, including onboarding, incentives and remuneration structures as well as ongoing monitoring and oversight. 

Expect continued regulatory interest in this space, including coordinated, multi-agency inquiries. Prepare for compulsory notices, reflect on broker and introducer relationships, and consider whether internal reviews should be conducted (and, if so, how and by whom).

Lending practices to small businesses. ASIC will examine lending practices by non-bank lenders in the small business sector, with a particular focus on practices that may lead to adverse outcomes for small business borrowers, including the presence of unfair contract terms.

Commencing Q2 2026-27.

Review standard form small business loans, guarantees, security documents and other consumer facing contracts to assess whether any terms are likely to be unfair.

Map your small business lending practices against relevant consumer protection laws. Address any areas that seek to limit or avoid consumer protections. 

Continuing areas of focus 

Offset accounts. ASIC will continue to monitor failures in managing offset accounts, with particular focus on monitoring customer requests, detecting discrepancies or failures, remediating impacted customers, and providing adequate transparency to customers.

This priority follows ASIC Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises (REP 837).

ASIC concluded that banks should assess “whether their governance, controls, monitoring and remediation arrangements are sufficient to ensure customers receive the offset account benefits they have been promised.”

Keeping promises to customers and preventing systemic failures. ASIC will continue to monitor banks’ governance and lending practices to address systemic compliance failures and mitigate consumer harm.

Assess and review effectiveness of current governance frameworks and lending practices in light of emerging technology and its impact on consumer protection.

Debt collection and financial hardship. ASIC will conclude and publish its review into debt buyers’ and contingent collectors’ conduct and lenders’ oversight. ASIC will also continue to focus on financial hardship.

ASIC will publish its findings in Q3 of 2026-27.

Assess debt collection and hardship arrangements against relevant consumer protection laws and guidance (including ASIC’s findings in REP 782 and REP 815) and consider whether improvements are required.

Enforcement risk: Shortcomings in responding to hardship requests are already leading to litigation. In 2026, the Federal Court ordered Westpac to pay a $26 million penalty for widespread failures in responding to customer hardship requests. Remediation programs should be designed with an eye to how they will be viewed by ASIC, the Court and potential class action plaintiff lawyers and litigation funders.

Implementation of the Scams Prevention Framework (SPF). ASIC will continue to work with banks and industry groups to facilitate the implementation of the SPF.

Review and assess existing processes and controls to ensure compliance with the SPF and related obligations and ensure readiness to respond to any information requests or enquiries from the regulator.

Monitor proposed changes to the Australian Financial Complaints Authority’s (AFCA) Rules and relevant industry codes and update internal and external dispute resolution processes as required.  

Enforcement risk: HSBC Bank Australia was ordered to pay a $35 million penalty for scam protection failures. With enhanced regulatory frameworks in this space, regulated entities should expect further utilisation of enforcement and consumer claim pathways.

Outcomes for current activities

Use of complaints to identify systemic issues. ASIC is testing how well superannuation trustees use member complaints data to identify and address systemic issues and improve service delivery.

Findings should be published in the second quarter of 2026-27. 

Ensure that your organisation understands the low bar set in the law for what is systemic, and note that “issues” can be wider than “breaches”. Refer to ASIC Regulatory Guide 271 Internal dispute resolution (RG 271), in particular RG 271.117 for ASIC’s commentary on systemic issues.

Review current internal dispute resolution frameworks for compliance with the obligations to identify and manage systemic issues in RG 271.

Determine what steps are currently taken to identify systemic issues through member complaints and the processes for managing those issues.  Consider if uplifts are needed.

Ensure that there is a single accountable person for the management of systemic issues identified through member complaints.

New activities

Next phase in member services review. This is a multi-year review in which ASIC aims to drive industry progress on improving service delivery and member outcomes. ASIC has focused on areas such as death benefit claims, and will continue to focus on root causes of complaints.

This work has commenced. ASIC will publish its findings in Q2 of 2026-27.

Lifting member services and outcomes in the superannuation industry is a long-term priority for ASIC.

Complaints have long been considered as providing superannuation trustees with important information about a potential systemic issue. However, this requires appropriate data analysis and root cause analysis. ASIC’s early work indicates that 50% of trustees reviewed did not identify a single systemic issue for the review period.

Superannuation trustees should ensure that their complaints team have the skills to appropriately analyse complaints so that root causes (instead of contributing factors or proximate causes) are identified.

The outcomes of this analysis should be part of reporting to the management team and the board.

Trustee oversight of advice fee deductions. ASIC will continue to monitor and act on misconduct by trustees that inappropriately erodes members’ superannuation savings. ASIC will conduct a review of trustee oversight of advice fee charges deducted from a member’s account, against the findings in REP 781 and 833. It is not clear whether this further review will target platform trustees, although ASIC does urge all trustees to review current processes against better practices.

Commencing 1H 2026-27.

This is an important policy priority for ASIC, given the challenges of an ageing population and the shrinking number of advisers.

To the extent that trustees have not already done so, they should review their current advice fee deduction processes against the findings in REP 781 and 833 to determine if uplifts are required. In assessing whether uplifts are required, trustees should remember that, while the steps set out in these reports represent clear regulator expectations, neither the law nor the courts have expressly required these steps to be taken.

Trustee performance under Retirement Income Covenant (RIC). ASIC conducted a pulse check on RIC compliance in 2025, the outcomes of which were published in Report 826 in November 2025. ASIC will conduct a new review of RIC compliance to determine the industry’s progress since implementation of the RIC. ASIC will aim to release a further report to provide industry wide insight into certain practices core to better retirement outcomes and, where possible, share examples of better practices. ASIC’s aim is to continue uplifting industry practice.

Commencing 2H 2026-27.

As stated above, this is an important policy priority for ASIC with an ageing population.

Data analytics skills for analysing member cohorts and needs, retirement solutions for those cohorts and information and financial advice support are likely to be key parts of most superannuation funds' business plans.

Consider the level of the trustee’s understanding of member needs in retirement, including how the trustee has obtained that understanding and whether further steps are required.

Review the trustee’s retirement income strategies and the trustee’s monitoring processes for assessing whether the expected outcomes to date have been met. Use this understanding to further develop and refine the information provided by the trustee to members, its financial advice offerings and product offerings.

Other areas of focus

Death benefit claims handling. ASIC will continue to monitor and review trustee administration practices regarding handling death benefit claims. 

This priority follows ASIC Report 831 Delivering on death benefits: Have super trustees stepped up? (REP 831) and ASIC Report 806 Taking Ownership of Death Benefits: How Trustees Can Deliver Outcomes Australians Deserve (REP 806).

Trustees should be well progressed or finished implementing steps to reduce the time it takes to pay death benefits.

Moneysmart program for superannuation and retirement. ASIC will continue to raise awareness and publish guidance on its Moneysmart tools for superannuation and retirement support.

This reflects the growing need of an ageing Australian population for information about superannuation and retirement.

Other areas of focus include misconduct targeting vulnerable members, AI usage, scam prevention and disruption, and cyber resilience, financial reporting and audits as well as the impact of superannuation on Australian markets.

These are areas that should be of continual focus for superannuation funds.

Consider what the trustee’s definition of vulnerable members is. Consider what steps the trustee adopts to protect them from misconduct and to assist them more generally. Consider whether the trustee has proper oversight of service providers' and insurers' practices in relation to vulnerable members.

Review fraud and scam protection processes, and consider engaging with the trustee’s bank to understand the steps they adopt to prevent scams.

Automation through AI usage may achieve efficiency gains but can also amplify risks and undermine member trust. The privacy reforms that require disclosure of automated decision making should also be considered.

New activities

Claims management firms. Since Q1 2026-27, ASIC has been investigating certain practices of for-profit claims management firms due to industry and consumer advocates’ concerns that these practices may cause consumer harm.

ASIC’s review includes such firms’ role in claims and complaints handling, fee arrangements, sales and client acquisition practices and commercial relationships of these firms with repairers and other suppliers.

‘Disaster chasers’ have been on ASIC’s radar for some years. However, ASIC’s renewed focus on this issue has implications for not just claims management firms but also insurers and brokers.

Claims management firms must be aware of their legal obligations and constraints, including those under consumer protection legislation such as the prohibition on misleading or deceptive conduct and unconscionable conduct. Exploitative, opportunistic or unfair conduct, as well as other anti-competitive or anti-consumer conduct, is likely to be a focus of the regulator’s scrutiny.    

Insurers and brokers might benefit from consumer education campaigns as well as on-the-ground support, especially after a catastrophe or another large-scale loss event, with a view to providing guidance, support and assistance to insureds and their communities. It is likely that this work will coincide with the industry’s efforts in the review of the General Insurance Code of Practice.

Whilst ASIC’s investigations into for-profit claims management firms continue, insurers should consider their interactions with such firms in light of their claims handling obligations to also minimise consumer harm.

General Insurance Code of Practice. ASIC will review the new General Insurance Code of Practice in accordance with the updated ASIC Regulatory Guide 183 Codes of conduct for the financial services and credit sectors (RG 183).

ASIC’s view, as stated in RG 183, is that the primary role of an industry code should be to raise industry standards and deliver substantial consumer benefits. Industry members should therefore be cognisant of how the new General Insurance Code of Practice will address current industry and consumer issues and the insurers’ delivery of benefits to their customers in an ever-evolving insurance landscape.

Insurers should ensure they have processes in place to deliver services in accordance with their new Code obligations.  

Other strategic priorities and relevant projects. ASIC has noted that it may include general insurers in broader ASIC reviews including on the quality of sustainability reports, corporate governance practices and financial reporting. 

Insurers should not lose sight of broader regulatory discourse and the earlier ASIC Corporate Plan for FY27, issued on 26 August 2026, noting that the examples highlighted by ASIC under this area of focus are from ASIC’s second strategic priority ‘Strengthen professional conduct and improve access to reliable financial and business information’ from that plan. The supervisory letter complements the FY27 Corporate Plan but does not replace its focus areas.

Some other documents insurers can have regard to include the report ‘ASIC's review of sustainability reports lodged for 31 December 2025’ released September 2026 (REP 839) and ‘ASIC’s oversight of financial reporting and audit 2024–25’ released October 2025 (REP 819).

Continuing areas of focus

Motor vehicle insurance premium disclosure. ASIC will continue to monitor motor vehicle insurers’ premium disclosure practices following its ‘Road testing transparency in car insurance premiums’ report (REP 838) which identified deficiencies in this area. 

Insurers should review their premium disclosure practices in light of the supervisory letter and REP 838. ASIC expects that motor vehicle insurers will disclose pricing information (in quotes and in renewal documents) in a way that is clear, useful and easy to compare. According to ASIC’s guidance, some improvements could include an explanation of how different factors go into the calculation and/or revision of premiums, setting out how much consumers could save by paying the premium yearly and making important information prominent and easy to find at renewal.

Whilst ASIC’s focus is on motor vehicle insurance, this exercise could provide an opportunity for insurers to review their pricing practices across other lines as well.

Improving cash settlement practices in home building insurance. ASIC will continue to monitor insurers’ cash settlement practices, noting that ASIC has identified concerns that settlement amounts may not be enough to cover the cost of repairs, that settlement processes did not give consumers enough information about their review rights and did not support vulnerable customers. ASIC has also noted that insurers do not have adequate data collection practices about how settlement offers change throughout the life of the claim and why. 

ASIC’s findings as outlined in its supervisory letter are consistent with its article of 31 August 2026 ‘Beyond the payout: ASIC warns home insurers to reduce cash settlement risks’ as well as its 2025 report ‘Navigating the storm: ASIC’s review of home insurance claims’ (REP 768). Insurers should review their cash settlement practices against these publications to ensure fair consumer outcomes by improving practices which do not meet regulatory expectations (including data collection and with specific regard for vulnerable customers).

The focus on cash settlement practices is part of ASIC’s broader focus on claims handling, and it is no surprise given that it was an ASIC enforcement priority for 2026. 

The recent case of Australian Securities and Investments Commission v Hollard Insurance Partners Limited [2026] FCA 1487 reflects that focus. In that case, the Federal Court imposed a $2 million penalty for the insurer’s breach of the duty of utmost good faith under the Insurance Contracts Act 1984 (Cth) in relation to its handling of one insurance claim under a home insurance policy.

Given this focus area, when considering compliance with their claims handling obligations, insurers should consider in particular their cash settlement processes and ensure they have processes in place to not only determine and pay settlements, but also maintain records to justify and document the process.

New activities

Strengthening basic services in life insurance. ASIC has commenced a review into service issues in life insurance.

ASIC will publish its findings in Q3 2026-27.

ASIC has stated that “all life insurers should review their own practices against our findings when published”.

ASIC identifies the basics as including “retaining a copy of the insurance policy, calculating premiums correctly and paying out the right benefits”.

This is particularly important for legacy products and systems. Given the long-tail nature of TPD and income protection cover, claims may be made many years after cover commenced, and must be assessed against the wording that applied at the relevant time. Life insurers should ensure they can locate and produce historical policy wordings, endorsements, schedules and premium bases (including for closed products and acquired portfolios).

Funeral insurance complaints. ASIC expects to review practices related to funeral insurance following increased reports from AFCA where costs exceed benefits.

Commencing 2H 2026-27.

Insurers should regularly review products to ensure they provide value for money, and to improve customer understanding (particularly for older and vulnerable customers).

Continuing areas of focus

New Life Insurance Code of Practice. ASIC will continue to monitor the work of the Council of Australian Life Insurers in drafting a new Life Insurance Code of Practice following the completion of the independent review of the current code.

CALI released its industry response to the independent review’s final report on 30 September 2026, and is setting up four workstreams covering mental health, claims handling, First Nations people, and funeral insurance. It is expected that this process will be completed in the first half of 2027. CALI's CEO has said the mental health workstream will be run "in consultation with our members, with mental health stakeholders, and with other stakeholders".

On mental health:

• CALI proposes that standard form disability contracts should not automatically exclude cover for all mental health conditions, but that this should not prevent benefit design features for mental health cover (such as caps, eligibility criteria, waiting periods or maximum sum insured limits), customer choice to modify cover, or alternative terms following individual underwriting.
• Key questions have been referred to the mental health workstream, including whether standard form mental health limitations must be supported by documented actuarial or statistical data, three-yearly review of product design, and industry guidance on sustainable product design.

Other key proposed changes to the Code include:

• Vulnerability frameworks will need rebuilding around AS 22458, including to take into account risk factors such as bereavement, cognitive impairment, trauma, sexual orientation, gender identity and sex characteristics, and financial abuse.
• CALI’s family and domestic violence policies will become Code obligations.
• Hardship processes will need firmer timeframes and triggers.
• Changed claims handling and underwriting obligations, including that every claimant must have a real-person primary contact and that surveillance periods be capped at four months each.
• Sales and cancellation practices are being tightened.
• Compliance and enforcement exposure is increasing.

Other areas of focus include misconduct targeting vulnerable customers, cyber resilience, and the impact of AI usage.

Life insurers should maintain human oversight of underwriting and claims decisions, test AI tools for fairness and accuracy, and ensure automation does not undermine vulnerability identification and support obligations.

New activities

Thriving public markets and resilient and competitive market infrastructure.

ASIC is continuing to enhance its supervision of the ASX.

ASIC will focus on forward-looking regulation, including oversight of the ASX24 and TMX Australia Exchange transitions to new trading platforms and CHESS Release 2.

ASIC has committed to supporting public equity markets, including by clarifying its guidance on when forecasts are required in a prospectus and confirming flexibility in how they may be presented.

ASIC will assess and address AI-driven manipulation and market integrity risks, including deepfakes and misinformation. It will also review the controls and governance that market intermediaries have in place for error and suspense accounts to prevent and detect possible abuse.

ASIC appears open to continuing to engage on public markets; for example, it will continue to run a trial process to shorten IPO deal timetables. Relevant stakeholders should continue to engage proactively with the regulator to press for reforms that can enhance Australian public markets, while being cognisant of investor protection and the need for confidence in Australian regulatory settings.

Strengthen market resilience.

ASIC will test and strengthen its crisis response frameworks, including against rapid, multi-pronged attacks enabled by frontier AI, and expects industry to do the same.

ASIC will also consult on further aligning the operational resilience market integrity rules with APRA’s CPS 230 Operational Risk Management.

ASIC will engage with industry to strengthen its capability to monitor market-wide risks and stress.

In particular, ASIC will assess how market stress may transmit across public and private markets, and the resilience of key controls and arrangements during periods of market stress.

Boards of intermediaries and other market participants should oversee cumulative, interrelated cyber and other digital vulnerabilities, and ensure their risk and decision-making frameworks support timely escalation. ASIC also expects intermediaries to explore defensive AI for threat intelligence, vulnerability detection and incident response.

Support responsible financial innovation and tokenisation.

ASIC will continue to support responsible financial innovation, building on the Government’s financial innovation strategy and by establishing and implementing ASIC’s refreshed approach to innovation, including a broader general sandbox.

ASIC will implement the new regulatory regime for digital asset platforms (DAPs) and tokenised custody platforms (TCPs), including by issuing consultation papers, regulatory guides and draft rules ahead of the regime’s formal commencement.

Regime commences April 2027.

Following royal assent of the Corporations Amendment (Digital Assets Framework) Act 2026, ASIC’s proposed regulatory guide is scheduled for release in Q1 2027 and will provide guidance on how the new regime will operate and who will require a licence.

This area will involve significant reform over the coming months, bringing both new opportunities and new compliance requirements, and therefore warrants close attention. Digital asset-focused businesses, as well as other financial services firms seeking to engage in digital assets or tokenisation, have an opportunity to provide meaningful input before new rules and guidance crystallise.

Digital asset businesses that do not have the benefit of ASIC’s “no action relief” (see our alert here) should ensure they are appropriately licensed or otherwise exempt. Offshore digital asset businesses should review their current cross-border activities.

Robust debt and derivative markets.

ASIC will continue to monitor the liquidity and integrity of the transactions underpinning the Bank Bill Swap Rate, and the ASX’s implementation of the Secured Overnight Funding Index Australia (SOFIA), to support investor confidence, liquidity and competitive pricing.

ASIC will support industry in developing a pathway for central clearing of repos in Australia.

ASIC will also consider whether the currently designated significant financial benchmarks remain appropriate.

ASIC will review the risk management of significant debt market intermediaries that are not prudentially regulated.

Debt and derivative market intermediaries should continue to review, and where necessary improve, their governance, risk management and controls in light of increased ASIC scrutiny.

Evaluating concerns in prediction markets.

ASIC will monitor how prediction markets and other event-based contracts are marketed and distributed, particularly to retail clients. It will also consider the boundary between wagering and financial products and take appropriate action within its remit.

Any firm seeking to offer (or provide access to) “prediction markets”, “event contracts” or similar products should carefully assess its business model against Australia’s financial services and gambling regimes. Those regimes operate at both Commonwealth and State and Territory level and can currently be difficult to navigate.

Continuing areas of focus

Encourage healthy, transparent, and sound private markets. ASIC’s further surveillance of private credit funds will examine distribution by financial advice licensees and advisers (including to retail investors), the direct distribution of retail private credit funds (including marketing, disclosure and fee practices), and the fee and incentive structures of targeted wholesale private credit funds.

Fund operators should review current practices against ASIC Report 820 Private credit surveillance report: Retail and wholesale surveillance (REP 820) with a view to addressing misaligned fee incentive structures, misleading conduct, and weaknesses in governance and conflict management frameworks.

Finalise pre-hedging guidance. ASIC will finalise a new regulatory guide on pre-hedging aligned with the International Organization of Securities Commissions’ (IOSCO) recommendations. Following public consultation in June and July 2026, the guide will replace ASIC’s guidance for market intermediaries issued on 1 February 2024.

Proposed to be released Q4 2026.

Market intermediaries should review their existing pre-hedging procedures against ASIC’s final guidance once released.

Consumer protections for complex products. ASIC will publish a consumer media release, an industry Market Integrity Update and supporting content on the Moneysmart website on complex products, including fractional shares, micro-investing, exchange traded options and futures.

ASIC will also consult on targeted amendments to the CFD Product Intervention Order and on extending it beyond May 2027, to ensure it remains effective as products and markets evolve.

CFD issuers should review current distribution and compliance practices to assess whether they effectively mitigate consumer harm and align with the findings in ASIC Report 828 Risky business: Driving change in CFD issuers' distribution practices (REP 828).

Consider potential improvements to target market determinations, client onboarding processes, compliance reporting and client outcome monitoring.