ASIC’s 2026 Mandate: Guarding wallets in the high-tech frontier
Introduction
Today’s post is our first post for 2026. We hope that all our readers have had a relaxing break with family and friends over the festive season and that you are energised for what will be another interesting year in financial markets and the broader Australian economy.
Interest rates rise
Last week the Reserve Bank of Australia (‘RBA’) increased the official Australian cash rate by a quarter of a percentage point, becoming the first major central bank to go from rate cuts to rate hikes, following the post-COVID inflation spike. (Note in Japan - the BOJ raised its short-term policy rate to 0.75% from 0.5% in December but has not cut rates since before the COVID pandemic).
In a unanimous decision last Tuesday, the RBA's monetary policy board lifted the cash rate to 3.85 per cent.
The RBA said that "a wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025. While part of the pick-up in inflation is assessed to reflect temporary factors, it is evident that private demand is growing more quickly than expected, capacity pressures are greater than previously assessed and labour market conditions are a little tight".
ASIC Priorities for 2026
So, as Australians navigate a potentially cooling and complex economy in 2026, the Australian Securities and Investments Commission (‘ASIC’) has shifted its crosshairs to protect everyday consumers from increasingly sophisticated financial threats. For 2026, the regulator is doubling down on "big brand" accountability while moving away from previous years' focus on greenwashing.
1. The cost-of-living crackdown
With household budgets under strain, ASIC’s top priority is misleading pricing practices.
Insurance Transparency: Insurers are on notice regarding premium renewal increases and misleading comparison pricing.
Banking Ethics: Major banks and credit providers face scrutiny over interest rate accuracy and the removal of barriers for low-income customers seeking low-fee accounts.
2. Reining in Private Credit and hidden markets
Australia’s private credit sector has ballooned to over $200 billion of AUM, and ASIC is concerned about its "opacity".
Governance Warnings: The regulator is targeting poor practices in private credit funds, specifically looking at fee structures, conflict-of-interest management, and the mis-selling of these complex products to retail investors.
The "Shield" Fallout: A dedicated team of 40+ staff continues to pursue those responsible for the Shield and First Guardian Master Funds collapse, which impacted nearly 12,000 Australians.
3. Advanced tech and AI governance
The rapid rise of agentic AI and automated decision-making has created a new frontier for exploitation.
AI-Powered Scams: ASIC is investigating businesses with weak governance over advanced technology, as AI is increasingly used to fuel hyper-realistic scams and exploit consumer behavioural biases.
Market Resilience: A critical report on ASX infrastructure is expected in March 2026, focusing on the stability of the aging CHESS system and its ongoing replacement project.
4. Superannuation accountability
Super trustees are under the microscope for member services failures.
Claims Processing: ASIC is actively suing major funds over delays in processing death and disability claims.
Retirement Integrity: With $750 billion set to move into retirement phases over the next decade, the regulator is targeting high-pressure sales tactics that steer seniors into unsuitable, high-risk investments.
5. Financial reporting and market integrity
ASIC has signalled an "appetite for litigation," seeking record-breaking penalties to deter corporate misconduct.
Insider Trading: A specialised team remains focused on strengthening prosecutions to maintain Australia's reputation for clean markets.
Lodgement Failures: Large proprietary companies that fail to lodge financial reports on time will face stepped-up enforcement actions in 2026.
A reminder of ASIC’s priorities on Private Credit compliance
For 2026, ASIC has explicitly prioritised a crackdown on "poor private credit practices," transitioning from general surveillance to active enforcement. To avoid being the next "big brand" in the regulator's crosshairs, businesses must align with the ASIC Regulatory Catalogue for Private Credit, December 2025.
Key compliance steps recommended for the Private Credit sector include:
Conflict Management Integrity: Establish a detailed, regularly updated conflicts of interest register. ASIC is specifically targeting structures where managers use special purpose vehicles to capture margins that should flow to investors.
Independent Valuation Protocols: Move toward regular, independently reviewed valuations for all material positions. ASIC has warned against "valuation manipulation," where inflated asset values are used to support larger, higher-risk loans.
Fee Structure Transparency: Quantify and disclose all fees and margins clearly. The regulator expects a reasonable justification for any fees not paid directly into the fund and is scrutinizing "hidden fees" that obscure the true risk-return profile.
Liquidity and Stress Testing: Implement robust liquidity risk management, including regular stress testing and standardised default metrics. This is critical for avoiding structural mismatches between investor redemptions and underlying asset liquidity.
Design and Distribution (DDO) Compliance: Ensure products are marketed only to their target market. ASIC has already issued interim stop orders for funds that mischaracterised high-risk or illiquid assets as "low-risk" or "capital-preserving".
Governance and Staffing: Boards must maintain independence from management and ensure committees have clear mandates. AFS licensees must also demonstrate they have adequate human and technological resources to oversee complex portfolios.
Enhanced Reporting Architecture: Systems should be capable of generating granular data on short notice, such as borrower-level pricing and impairment review frequency, to satisfy ASIC’s increasing demand for real-time market transparency.
Conclusion
Given some of the recent issues in Australian financial services relating to the losses in retail superannuation linked to the Shield Master Fund and questionable NTA calculations of illiquid property holdings, one can assume that ASIC will increase regulation in the AFSL and regulated managed investment scheme space. More significant compliance regulations are on their way.
If you are a private company board or a company holding an AFSL and would like to discuss how I can assist your company with enhancing your governance so that you can better manage your compliance risks and protect your investors, please contact me for an obligation free discussion. I can assist your company with:
Responsible manager;
Compliance committee;
Company director;
Advisory board services;
Compliance reviews; and
Governance committee services.
I’d be excited to assist your company meet its ongoing governance and compliance obligations relating to your company, your AFSL, and to give your customers and investors / shareholders comfort that you can anticipate future trends and are managing your business with institutional grade corporate governance.
Our new marketing tagline for 2026
Over the holidays our team worked on introducing a new tagline for our marketing material in 2026 relating to AndrewSMcNeil.com:
Governance + Strategy = High Performance
We will post more regarding this new marketing tagline in the coming weeks.
Disclaimer
This content of this blog post is not legal advice. The information provided is opinion and for general purposes only and is not a substitute for personalised legal counsel.