In this edition, delayed to reflect the 2026-2027 Federal Budget (which is considered in ‘Over the Horizon’), we cover Australian Securities and Investments Commission (ASIC) Chair Mr Joe Longo's final keynote address, in which he reflected on ASIC's transformation during his tenure.
In regulatory news, we report on Treasury's consultation on strengthening the annual superannuation performance test and two notable Australian Prudential Regulation Authority (APRA) developments. In our legal update, we examine ASIC’s first enforcement outcome in the Federal Court regarding internal dispute resolution requirements, which came into effect in October 2021.
Governance
ASIC Chair delivers final keynote on public accountability
On 7 May 2026, outgoing ASIC Chair Joe Longo delivered his final keynote address at the 2026 Financial Counselling Australia Conference in Cairns. Mr Longo characterised ASIC's transformation into a “modern, confident and ambitious” regulator, citing a more than doubling of formal investigations and a more than a quadrupling of penalty value during his tenure. Key figures included $411 million in penalties secured so far this financial year (excluded amounts still subject to court approval), approximately $421 million returned to investors in connection with the Shield Master Fund and First Guardian Master Fund matters, and over $160 million in bank refunds to low-income consumers following ASIC’s Better Banking surveillance reports. A valedictory address from an outgoing Chair is closely read by the regulated community for signals on enforcement themes. With Sarah Court confirmed as incoming Chair, directors should treat the speech as a primer on the supervisory posture that ASIC's new leadership will inherit. Directors of entities operating in credit, insurance, superannuation and financial services more broadly should keep in mind that the enforcement appetite Mr Longo described, particularly around predatory lending, financial hardship and consumer harm, is likely to persist under the incoming Chair, who previously led ASIC's enforcement division.
Regulatory
Treasury consults on significant overhaul of the superannuation performance test
On 8 May 2026, Treasurer Dr Jim Chalmers released Treasury's consultation paper, Strengthening the superannuation performance test, with submissions closing on 19 June 2026. The paper canvasses several options including a new 'CPI + X%' benchmark for emerging and alternative asset classes (such as venture capital, renewable energy, and social and affordable housing) subject to an allocation cap or replacing the current strategic asset allocation benchmark with a simple reference portfolio. Treasury also proposes extending the test to single-sector, retirement and externally directed products, noting that the collapses of the Shield and First Guardian Master Funds have highlighted gaps in the test’s coverage, while acknowledging that the test cannot predict such failures. The Treasurer said the existing test “discourages investment in areas like housing, energy, venture capital and start-ups”. This is the most significant proposed reform since the ‘Your Future, Your Super’ performance test was introduced in 2021. Directors should keep in mind that the proposed changes could materially alter how superannuation capital flows into alternative and emerging asset classes. RSE trustee boards, asset managers and listed entities seeking long-duration superannuation capital (in infrastructure, housing, renewable energy and venture capital) should engage with the consultation and review their strategic asset allocation frameworks against the reform options. Submissions close on 19 June 2026.
APRA revokes in1Bank's banking licence and temporarily withdraws credit assessment guidelines
On 4 May 2026, APRA revoked in1Bank Limited's (in1Bank) authorised deposit-taking institution (ADI) licence under the Banking Act 1959 (Cth), following the bank's completion of its return of deposits process in March 2026 after announcing in January that it intended to exit the banking industry. Three days later, on 7 May 2026, APRA temporarily withdrew its Guidelines on Recognition of an External Credit Assessment Institution (last updated in 2013) as part of its regular review of the prudential framework, with a further update to follow once the review is complete. These are two distinct developments, but both carry practical implications for directors. The in1Bank revocation is a reminder for boards of smaller and challenger banks to stress-test their own prudential resilience. Directors of any entity that relies on a banking-as-a-service model should confirm that the underlying ADI licence holder remains in good standing. Separately, the temporary withdrawal of the credit assessment guidelines matters because those guidelines underpin how ADIs, insurers and superannuation trustees risk-weight exposures using external ratings. Directors of entities that use external ratings in their capital calculations should ask management whether current practice can continue unchanged while APRA’s review is underway, and what contingencies exists if the revised guidelines alter the approved approach.
Legal
Federal Court holds Telstra Super Pty Ltd accountable for internal dispute resolution failures
On 30 April 2026, the Federal Court found that Telstra Super Pty Ltd (Telstra Super) (now known as Tetra Servicing Pty Ltd) failed to comply with its internal dispute resolution procedures. The Federal Court held that Telstra Super failed to respond to about one third of complaints received between 22 October 2021 and 13 January 2023 within the mandatory 45-day timeline. In approximately 30% of those late cases, Telstra Super took more than 100 days to provide a response. The Federal Court also found that Telstra Super failed to explain the reasons for delays and, in some instances, failed to inform complainants of their right to escalate their complaint to the Australian Financial Complaints Authority. Importantly, the Federal Court did not find that Telstra Super failed to deliver financial services efficiently, honestly and fairly, nor did it find that Telstra Super had failed to adequately resource its internal dispute resolution process. This is the first enforcement action ASIC has brought under the internal dispute resolution requirements, which came into effect in October 2021 pursuant to ASIC Regulatory Guide 271 Internal dispute resolution. Under these requirements, superannuation trustees must respond to most complaints within 45 days. Directors should keep in mind that ASIC has signalled it will actively enforce internal dispute resolution obligations across all financial services licensees, not only superannuation trustees. Boards should satisfy themselves that their organisations have robust complaints handling systems, adequate resourcing and clear processes for communicating with complainants about delays and escalation rights.
Over the Horizon
Federal Budget 2026–27: what directors need to know
The 2026–27 Federal Budget, handed down on 12 May 2026, is one of the most significant reform budgets in recent years. The headline tax reform replaces the 50% capital gains tax (CGT) discount for individuals, trusts and partnerships with cost base indexation and a minimum 30% tax rate on capital gains, effective 1 July 2027. The reform applies to all CGT assets, including shares and commercial property and captures gains accruing after 1 July 2027, including pre-1985 assets for the first time. Negative gearing restrictions, by contrast, apply only to residential property; commercial property and other asset classes (including shares) are unaffected.
The government will also expand venture capital tax incentives from 1 July 2027 to align with modern company valuations and will consult on how the CGT reforms interact with existing incentives for early-stage investment. A minimum 30% tax rate on discretionary trust distributions will apply from 1 July 2028, with rollover relief available for three years for small businesses wishing to restructure: effectively, the government is seeking to drive more business activity through companies rather than trusts. Directors should keep in mind that the shift from a flat discount to indexation will materially change the after-tax return profile for shareholders, and should be factored into any capital management, buy-back and equity incentive plan decisions from here.
The budget also permanently reintroduces loss carry-back for companies with turnover up to $1 billion, allowing eligible companies to offset a current-year tax loss against tax paid in the prior two income years, starting from 2026-27. Loss refundability will also be introduced for start-ups in their first two years of operation from 2028-29.
On the deregulation side, the government is reducing financial sector compliance costs by $780 million a year through a package of legislative reforms, including increasing company reporting thresholds and modernising financial system frameworks.
For companies with foreign shareholders or those involved in cross-border M&A, the foreign investment regime will be further strengthened. The government has announced a new performance target to decide all low‑risk applications within 30 days from 1 January 2027. It has also announced the removal of ineffective conditions on existing approvals, along with further reforms to foreign investment laws and the Register of Foreign Ownership of Australian Assets. Directors should keep in mind that these changes may affect transaction timetables and structuring for any deal with foreign counterparties and boards should review compliance positions.
These changes land against the Reserve Bank of Australia's third consecutive cash rate increase, to 4.35% on 5 May 2026 (as discussed in a previous edition of Boardroom Brief). They also coincide with a fiscal outlook that projects surpluses over the next four years with cumulative deficits of approximately $150 billion, as the Middle East conflict continues to weigh on growth and inflation. Treasury has also modelled a more severe scenario in which oil prices reach USD200 per barrel and inflation peaks above 7%. Directors should factor this fiscal and geopolitical uncertainty into capital allocation, gearing and risk management settings.