The regulatory environment continues to evolve at a rapid pace for market participants in the Australian securitisation sector. Regulators have also been active in enforcement across a number of areas relevant to the assets underpinning securitisation transactions.
With markets busy, regulatory reform continuing to build and enforcement actions ongoing, keeping abreast of the universe of focal points can be challenging. Below, Kathryn Tomasic, Special Counsel, and Anne-Marie Neagle, Partner, give a nutshell overview of 10 need-to-know regulatory developments for Australian securitisation market participants in 2025.
Hardship
Effective and compliant hardship practices are an important component of an originator’s servicing processes. ASIC’s May 2024 report on its review into how large ADI and non-bank lenders are supporting customers experiencing financial hardship identified a number of shortcomings in lenders’ approaches to managing hardship and urged lenders to improve arrangements to support customers.
ASIC has recently taken action against several lenders for alleged hardship-related contraventions and has signalled its intention to continue to monitor this space closely, noting that financial hardship assistance remains a key focus area as customers experience cost-of-living pressures. Hardship practices accordingly remain a core priority for compliance uplifts.
Debt management and collection misconduct
Also in the current servicing spotlight, is ASIC’s listing of debt collection, debt management and credit repair practices as one of its strategic enforcement priorities for 2025, and the related probe into conduct in this space ASIC announced in July 2025. ASIC intends to review practices in this sector with a view to minimising customer harm and driving better consumer outcomes, against the backdrop of increasing cost of living pressures and financial hardship discussed above. This review - and the focus it brings - will further inform the on-going development of servicing practices.
Design and distribution obligations
Appropriate design and distribution processes underpin sound asset originations. ASIC has recently been vigorous in enforcing the product design and distribution obligations (DDO), which have applied to financial products and consumer credit since October 2021. To date, ASIC has commenced six civil penalty proceedings alleging breach of DDO provisions. Three of those proceedings have concluded, and in each case finding in ASIC’s favour with a penalty of $8 million.
ASIC continues to monitor DDO compliance closely and has issued over 80 stop orders since commencement of the DDO regime (with several stop orders issued in September 2025). DDO processes are accordingly a current compliance priority.
Scams
Scam prevention remains a key regulatory focus, alongside broader financial crime enforcement, and is potentially relevant across all aspects of a securitisation. The government enacted legislation to establish a scam prevention framework in February 2025, which is designed to protect individuals and small businesses in Australia, as well as Australian residents overseas using services provided by Australian regulated entities. Mandatory industry codes are expected to impose sector-specific scam prevention obligations on various sectors, including banking and digital platforms. Market participants should continue to monitor for further developments in this space.
AML/CTF
The past 12 months have seen some of the most significant changes to the AML/CTF regime since it was introduced. Changes to the AML/CTF Act will take effect from 31 March 2026, and are likely to require significant updates to existing AML/CTF programs and related procedures. The new AML/CTF Rules which will apply alongside the revised Act were finalised in August 2025, and AUSTRAC is expected to publish core and sector-specific guidance in the coming months. Changes to the AML/CTF regime will impact processes and practices across the industry, from originators to investors.
PPSA
There are proposed comprehensive reforms to the personal property security securities (PPS) regime. Although the proposed changes are intended to simplify the regulatory framework and make it more consistent and accessible, the consultation process raised many substantial issues. PPS changes have the potential to impact all aspects of a securitisation, from underlying asset originations through to transaction-level requirements, and are likely to require changes at every stage, from templates to processes and practices.
Whilst the consultation closed in November 2023, the Government’s response to the submissions has not yet been released, so it will be important to continue to keep these reforms under review.
Small and medium bank reform
The Council of Financial Regulators reported on the state of the small and medium bank sector in July 2025 and made a number of recommendations designed to drive competition and enhance productivity. Key recommendations centre on matters including improving proportionality in regulation, facilitating entry and exit from the sector and improving access to funding markets (including securitisation). Implementation of these recommendations may have significant implications for the competitive landscape for the bank and non-bank sector alike. Although more radical changes such as publicly-backed funding markets or multi-seller securitisations were not ultimately recommended by the review, other structural recommendations (such as the recommended increase in the cap on covered bonds from 8 to 12 percent) may impact the sector if implemented.
Regulation of private markets (including private credit)
ASIC has stepped up its focus on private markets, including private credit (which is of particular relevance to the securitisation sector). In September 2025, ASIC followed its February 2025 discussion paper on Australia’s evolving capital markets with a report on findings in the private credit sector, calling out examples of concerning behaviours and areas in which enhanced standards of conduct are required. ASIC has indicated that it expects market participants to take meaningful action in response to the recent report and has signalled its willingness to intervene where conduct falls short of expected standards. Further developments coming out of this regulatory interest in the sector should also be kept under watch for securitisation markets as ASIC continues to refine its thinking in this area.
Consumer data right
The consumer data right (CDR) regime has already been implemented in the banking and energy sectors and is now being expanded to apply to non-bank lenders. Non-bank lenders will be required to comply with certain data sharing obligations on a phased basis from 2026 onwards. The ACCC has signalled its willingness to take enforcement action for breaches of the CDR regime, and penalties for alleged breach have been paid by several financial institutions. We expect the CDR regime to be of particular focus for originators, although it has the potential to touch on other aspects of the securitisation market.
Climate reporting
Since 1 January 2025, a mandatory climate reporting regime has applied to many large Australian businesses (including banks and non-banks) that are required to prepare financial reports under the Corporations Act, and the roll out of further mandatory reporting phases continues. Securitisation market participants may be affected directly or indirectly by the climate reporting regime – either because participants are themselves required to report, or because they are required to provide emissions data to financiers to comply with their own reporting obligations.
We expect the regulatory tides to continue in 2026, with the impact of this Top 10 continuing to play out for originators and other market participants. Other new developments - such as the new mandatory ACCC merger clearance regime coming into effect on 1 January 2026 – will add new layers to the regulatory landscape.
The KWM team is at the cutting edge of developments in the sector and is well placed to work with any client on their future needs, from established players to new entrants to the industry.
