In this edition, we discuss the Australian Securities and Investments Commission's (ASIC) Deputy Chair's opening statement at the third hearing of the inquiry into the oversight of ASIC, the Takeovers Panel and the corporations legislation, as well as the Australian Competition and Consumer Commission's (ACCC) decision to grant an urgent interim authorisation to fuel majors to coordinate on supply, alongside a new enforcement investigation into diesel supply conduct. We also examine the Australian Prudential Regulation Authority's (APRA) proposed reforms to bank capital and liquidity frameworks and the High Court of Australia's unanimous decision in favour of ASIC in the Sunshine Loans Pty Ltd (Sunshine Loans) appeal on judicial recusal.
In Over the Horizon, we consider the Council of Financial Regulators' (CFR) response to the escalating Middle East conflict and the implications for financial system resilience.
Governance
ASIC Deputy Chair says audit quality, financial reporting and sustainability reporting are key strategic priorities
On 20 March 2026, the Parliamentary Joint Committee on Corporations and Financial Services held its third hearing into the activities of ASIC and the Takeovers Panel. ASIC Deputy Chair Sarah Court delivered the opening statement and emphasised that strengthening market disclosure, specifically financial reporting, sustainability reporting and audit, is a key strategic priority for ASIC. She noted that ASIC's audit surveillance program will expand to 25 audit file reviews in 2025–2026, up from 15 in 2024–2025. Files will be selected randomly and where there are concerns about auditor independence and conflicts of interest. ASIC's surveillance work will also include reviews of mandatory sustainability reports. Ms Court indicated that ASIC will take a "pragmatic and proportionate approach to supervision and enforcement in the early years, supporting industry through guidance and education". Boards should engage proactively with their auditors on independence obligations and prepare for regulatory scrutiny of sustainability reports.
Regulatory
ACCC grants urgent interim authorisation to fuel majors to coordinate on supply and launches an enforcement investigation into diesel supply conduct
As discussed in a previous edition of Boardroom Brief, the ACCC has been closely monitoring fuel market behaviour as the Middle East conflict drives global oil prices higher. On 19 March 2026, the ACCC announced an enforcement investigation into allegations of anti-competitive conduct affecting diesel availability to independent wholesalers and distributors in regional and rural Australia. ACCC Chair Gina Cass-Gottlieb said, "It is not our usual practice to publicly announce investigations, but given the significance of the issue, the ACCC is confirming this enforcement investigation". On 20 March 2026, the ACCC also granted an urgent interim authorisation to the Australian Institute of Petroleum, its members and other relevant industry participants to coordinate in managing fuel supply chain impacts. The authorisation means that those companies may discuss, exchange information about and coordinate fuel supply to alleviate shortages without risking a breach of competition laws. The authorisation does not extend to sharing information about or reaching agreement on price. The ACCC has also increased its fuel price monitoring from quarterly to weekly reporting.
APRA to consult on reforms to bank capital and liquidity frameworks
On 16 March 2026, APRA announced a package of reforms to bank capital and liquidity settings aimed at maintaining the resilience of Australia's financial system amidst geopolitical and market volatility. Key proposals include:
- Changes to the liquidity framework for the largest banks to address risks not covered by existing Liquidity Coverage Ratio minimum requirements, and a more risk-sensitive framework for smaller banks.
- Amendments to the standardised capital framework to better align capital requirements with underlying risk, focusing on high-quality lending to critical infrastructure projects, corporates without a credit rating and residential property development.
- A simplified approach to the Basel Committee's Fundamental Review of the Trading Book to materially reduce compliance costs compared with full implementation.
APRA Chair Mr John Lonsdale stated, "While our bank capital framework is unquestionably strong, our liquidity framework has not kept up with international practice and needs to be uplifted". Consultation will begin with changes to standardised risk weights for credit risk in the first half of this year. Directors of authorised deposit-taking institutions should monitor APRA's consultation timetable closely, particularly in relation to lending to critical infrastructure, unrated corporates and residential property development.
Legal
High Court backs ASIC in Sunshine Loans' bias dispute – penalty hearing to proceed
On 18 March 2026, the High Court of Australia unanimously rejected Sunshine Loans’ appeal from a decision of the Full Federal Court concerning the recusal of the trial judge from determining penalty. In April 2024, the Federal Court found Sunshine Loans had contravened the National Credit Code by charging unlawful fees on over 670,000 small amount credit contracts between July 2016 and November 2020. Sunshine Loans subsequently applied for the trial judge, Justice Derrington, to recuse himself from the penalty hearing, arguing that certain language and adverse credibility findings in his liability judgment created a reasonable apprehension of bias. Justice Derrington initially agreed to recuse himself, but ASIC challenged that decision and the Full Federal Court overturned it in March 2025. Sunshine Loans then took the matter to the High Court of Australia. In six separate judgments, the High Court of Australia held 7–0 that the trial judge was entitled to proceed to determine the penalty. The matter will now return to Justice Derrington for a hearing on penalty.
Directors should keep in mind that the High Court of Australia has sent a clear signal: where a regulator's civil penalty case is split into liability and penalty phases, the same judge will generally handle both. Displacing the trial judge between stages on bias grounds will be very difficult. For any company facing ASIC proceedings, this narrows the options available to defer or disrupt a penalty hearing through a recusal challenge.
Over the Horizon
Escalating conflict in the Middle East is generating significant economic and market disruption
The escalating conflict in the Middle East is disrupting global energy and commodity markets, with oil prices rising sharply and supply chain pressures intensifying. The Reserve Bank of Australia's March 2026 Financial Stability Review, released on 19 March 2026, highlights increased risks to the global financial system, with the conflict contributing to sharp movements in global financial markets and a heightened risk of operational, cyber and security disruptions. Australian regulators are responding. The CFR noted that while direct exposure of the Australian financial system to the Middle East are limited, further deterioration could increase risks to financial stability. The ACCC has also taken steps to support fuel supply coordination.
Singapore and Australia released a joint statement reaffirming their commitment to strengthen energy security and support the flow of essential goods, including diesel and liquefied natural gas.
Boards should focus on resilience:
- Assess exposure to supply chain disruption and higher input costs.
- Review sanctions compliance in light of potential expansion.
- Stress test business continuity and operational resilience.
- Consider the impact of sustained energy price volatility on costs and market disclosures.
- Remain alert to heightened cyber risks linked to geopolitical instability.
We outline specific cyber risk actions in our recent article on cybersecurity risks arising from the Middle East conflict.