The year that was.
As we moved through 2025, AFSLs were operating in a landscape defined by sharper regulatory expectations and increasing scrutiny across governance, adviser capability and operational resilience.
ASIC’s thematic reviews and enforcement priorities make it clear that licensees must not only have strong frameworks in place but be able to evidence how they work in practice.
The year was characterised by uplift, in systems, documentation and oversight. Particular focus was on cyber resilience, adviser competency, managed account governance, complaints handling and emerging product risks.
Cyber Security - Increased Regulatory Expectations
Cyber resilience remains one of ASIC’s highest priorities, with a strong focus on governance, incident readiness and third-party oversight. AFSLs must demonstrate that controls are tested, monitored and aligned to their risk profile.
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Conduct a documented annual cyber risk assessment and remediate identified gaps at both practice and licensee levels.
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Test your incident response plan and record outcomes, learnings and action items.
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Review all outsourcing and technology arrangements to ensure cyber obligations are clearly defined and monitored.
Adviser education - 31 December 2025 deadline
Existing providers who do not meet the qualifications standard by 1 January 2026, face being ineligible to provide advice after 31 December 2025. To prepare, AFSLs should:
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Make sure the FAR is fully up to date - verify against the ASIC dataset.
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Where relying on the experienced-adviser pathway, ensure declarations and 10-year experience evidence are complete and validated.
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If an adviser does not meet the education standards, they must cease from the register on 31 December 2025.
Offshoring - Heightened Oversight and Evidence
With more AFSLs using offshore administration and support functions, ASIC is emphasising the need for strong governance, clear service-level expectations and visibility over risks that may arise from overseas operations.
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Maintain documented due diligence for all offshore service providers at both practice and licensee levels.
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Ensure oversight arrangements, monitoring processes and escalation steps are clearly defined.
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Record regular performance reviews and evidence how risks are being managed.
SMA Governance – ASIC Kicks Off Its Spotlight on SMAs
ASIC’s focus on SMAs aims to identify gaps in suitability, disclosure and investment governance. AFSLs using managed accounts must ensure their oversight structures are robust and that advice processes align to client needs.
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Refresh SMA governance documentation, including investment committee oversight and model review cycles.
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Review advice files to ensure client-specific suitability reasoning is clear and defensible.
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Validate SMA fee, disclosure and portfolio parameters against regulatory expectations.
ASIC’s SMSF Review - Report 824
Report 824 has placed renewed attention on SMSF advice quality, documentation and the need for clear justification where SMSFs are recommended. AFSLs must ensure advice processes reflect ASIC’s expectations for suitability and transparency.
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Refer and refocus back to INFO274 in providing SMSF advice.
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Where other business associations are relevant (e.g. accounting or SMSF administration), ensure conflicts are appropriately assessed and managed.
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Ensure advice documents adequately address the basis of your advice and specific consideration is given to the matters raised in ASIC’s Review.
What's on the horizon?
Looking ahead to 2026, AFSLs can expect a continued tightening of regulatory expectations, with several significant reforms already flagged for implementation.
The expansion of the AML/CTF regime, rising evidence standards, and growing focus on AI governance signal a shift toward more structured, technology-enabled and auditable compliance frameworks.
Next year will require licensees to prepare early, strengthen internal controls and ensure they can demonstrate clear oversight of emerging risks and new regulatory obligations.
AML/CTF regime expansion for Advisers
From March 2026, advisers offering designated services will fall under the AML/CTF regime. This introduces new obligations across identification, monitoring and reporting.
How to prepare:
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Build or adopt an AML/CTF Program aligned to AUSTRAC’s requirements.
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Implement ID, verification and client risk-rating steps within advice workflows.
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Train staff on AML/CTF obligations and document all training and monitoring activities.
Enhanced record-keeping and evidence standards
ASIC expects AFSLs to produce complete, accurate and contemporaneous evidence across all compliance areas. Manual processes will not support the level of scrutiny emerging.
How to prepare:
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Centralise registers and ensure they are complete and audit-ready.
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Document decision-making, escalation reasoning and remediation actions.
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Replace spreadsheets with structured systems that ensure integrity and traceability.
AI governance in advice and compliance workflows
AI use in advice processes is expanding, prompting further regulatory expectations on governance, validation, transparency and human oversight.
How to prepare:
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Document how AI is used in any advice or compliance workflow.
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Implement a validation process ensuring human review and accuracy checks.
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Review data governance, security safeguards and disclosure obligations for AI tools.
Strengthened governance and board engagement
Regulators increasingly expect Boards and Responsible Managers to demonstrate active involvement in oversight, including risk, financial reporting and compliance assurance.
How to prepare:
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Provide Boards with structured risk and compliance reporting packs.
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Maintain detailed minutes and evidence of governance decisions.
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Conduct periodic reviews of oversight frameworks to ensure responsibilities are clearly defined and met.
50%
Average reduction in outsourced compliance consulting resources.
45%
Average reduction in time spent finalising Adviser Reviews.
70%
Reduction in time spend on ASIC IDR reporting activities.
3x
Increase in remediation action items finalised by advisers.
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Boutique AFS Licensees
Boutique AFSLs often struggle with the heavy burden of regulatory compliance, which can be time-consuming and complex. Keeping up with evolving regulations, maintaining accurate documentation, and ensuring that all representatives adhere to legal standards can overwhelm small teams with limited resources.
Mid to Large Scale Firms
Compliance teams in mid to large scale financial advisory firms face challenges with the complex and evolving regulatory landscape. Keeping up with constant updates, and implementing them accurately, is difficult, exacerbated by inefficient manual processes and limited resources, increasing risks of fines and reputational damage.
Compliance Consultants
With constant changes in legislation and guidelines, staying updated is essential but time-consuming for Compliance Consultants - we know because we've been there! Balancing compliance with needs of building a successful business, managing client expectations, and ensuring thorough record keeping, all add to the pressure.
Dealer to Dealers
With constant changes in legislation and guidelines, staying updated is essential but time-consuming for Dealer to Dealers and their members. Balancing compliance with the practical needs of building a successful business, managing client expectations, and ensuring thorough record keeping, all add to the pressure.