Mackay Chapman August 2026 ASIC Update

In this month’s ASIC update:

• Mortgage brokers reminded of best interests duty;
• Feedback sought on low-volume financial market relief;
• Sell-side research guidance set to be simplified;
• Former director sentenced over $1.2 million misuse of company funds;
• First Mutual Private Equity ordered to wind up;
• Former NextGen directors banned from financial services;
• Former Noumi CEO found to have breached directors’ duties;
• Action taken against 36 SMSF auditors; and
• Record $830 million in civil penalties for 2025–26.

Mortgage brokers reminded of best interests duty

ASIC Commissioner Alan Kirkland has used a speech to the Mortgage and Finance Association of Australia Conference to outline what the regulator expects from mortgage brokers under their best interests duty.

ASIC is currently reviewing the mortgage broking sector, which now arranges 81% of new residential mortgages in Australia. The review is examining how effectively brokers are complying with their obligations, including the quality of recommendations and how customer complaints are handled.

Kirkland said brokers should recommend loans based on each customer’s circumstances and priorities, clearly document the reasons behind their advice and ensure customers understand the options available to them. Licensees should also monitor advice quality and use complaints and other data to identify potential problems early.

ASIC expects to complete its mortgage broker review later this year.

The review takes place alongside increased scrutiny of mortgage brokers with investigations by Big Four banks and aggregators, and investigations by professional bodies such as MFAA.  These were sparked by the CBA mortgage fraud uncovered late last year, concerns of mortgage fraud at Westpac and NBA, and AUSTRAC’s warning to ten major lenders that material money-laundering and terrorism financing risks existed due to widespread mortgage fraud.

It can be expected that ASIC’s review will continue to see mortgage brokers in the compliance and regulatory spotlight into 2027.

Feedback sought on low-volume financial market relief

ASIC is consulting on plans to renew regulatory relief that allows qualifying low-volume financial markets to operate without an Australian market licence.

The existing instrument is due to expire on 1 October 2026. ASIC considers the relief is still necessary and is proposing to retain it with largely the same requirements.

The main proposed change is to increase the annual transaction value threshold from $1.5 million to $2.5 million, reflecting inflation since the threshold was introduced in 2016. Markets would still need to record no more than 100 completed transactions over the relevant 12-month period to qualify.

Submissions are open until 20 August 2026.

Sell-side research guidance set to be simplified

ASIC is proposing a major rewrite of its guidance for sell-side research, reducing Regulatory Guide 264 from 42 pages to eight.

Sell-side research is produced by financial services firms such as investment banks and stockbrokers and can play an important role in investment decisions and capital raisings, including IPOs.

The proposed guidance takes a less prescriptive, principles-based approach and would give research analysts greater scope to contribute during the IPO process. Firms would still be expected to appropriately manage conflicts of interest and inside information and protect the independence of their research.

The changes follow industry feedback that the existing guidance is overly complex and could be easier to apply in practice. Consultation closes on 21 August 2026.

Former director sentenced over $1.2 million misuse of company funds

Former construction industry director Vickie Anne Vella has been sentenced to an 18 month intensive correction order for misusing more than $1.2 million belonging to two companies for personal purposes.

Vella, formerly a director of Coast Reo Pty Ltd and Midcoast Reinforcement Pty Ltd, pleaded guilty to dishonestly using her position to gain an advantage or cause detriment. Between August 2016 and April 2018, she withdrew approximately $1.22 million from company accounts, with funds spent on gambling, cash withdrawals and other personal expenses.

She was sentenced to 18 months imprisonment, to be served by way of an Intensive Corrections Order. Her conviction also automatically disqualifies her from managing companies for five years, until July 2031.

First Mutual Private Equity ordered to wind up

The Federal Court has ordered that First Mutual Private Equity Pty Ltd (First Mutual) and an unregistered managed investment scheme operated by it and Gregory Cotton be wound up.

The orders follow an application from ASIC, which sought the winding-up to protect investors and allow the remaining assets to be dealt with in an orderly way.

Liquidators from Deloitte SRT have now been appointed to take control of First Mutual, identify and recover available assets, assess claims and distribute any available funds to creditors and investors.

ASIC’s investigation into First Mutual and Mr Cotton remains ongoing.

Former NextGen directors banned from financial services

Two former directors of NextGen Financial Group have been banned from managing or performing certain roles within financial services businesses for three years.

ASIC found Nicholas Brookes and Vitorio Turco were each linked to NextGen’s failure or refusal to comply with at least two Australian Financial Complaints Authority determinations.

The complaints involved financial advice relating to the establishment of SMSFs to purchase property. NextGen did not make the payments required under the AFCA determinations, with affected consumers later receiving compensation through the Compensation Scheme of Last Resort.

Failing to comply with an AFCA determination is a grounds for cancellation of an AFSL and the banning of persons involved in the failure from financial services.

The bans took effect in July 2026. 

Each former director has the right to seek a review of ASIC’s decision in the Administrative Review Tribunal.

Former Noumi CEO found to have breached directors’ duties

The Federal Court has found former Noumi Limited managing director and CEO Rory Macleod breached his duties as a director and officer in connection with the company’s financial reporting.

The proceedings related to Noumi’s treatment of unsaleable inventory and the recognition of revenue from lactoferrin sales. The Court found Macleod knew, or ought to have known, that aspects of the company’s financial reports did not accurately reflect its inventory and revenue position.

He was found to have failed to exercise reasonable care and diligence and to take reasonable steps to ensure Noumi complied with its financial reporting obligations.

However, ASIC was not successful in all aspects of its case, with the Court dismissing claims relating to the 2019 financial year, continuous disclosure and false or misleading information. 

The matter is due to return to Court on 27 August 2026.

Action taken against 36 SMSF auditors

ASIC took administrative action against 36 SMSF auditors during the first half of 2026, bringing the total number of actions for the 2025–26 financial year to 64.

The regulator identified breaches including failures to maintain auditor independence and practical experience, meet auditing and assurance standards, complete professional development and lodge required annual statements.

Between January and June, four auditors were disqualified, three suspended, eight had additional conditions placed on their registrations and 21 had their registrations cancelled.

Across the full financial year, ASIC made 64 administrative decisions involving SMSF auditors, including eight disqualifications and 43 registration cancellations.

Record $830 million in civil penalties for 25-26 FY

ASIC secured a record $830 million in court-ordered civil penalties during the 2025–26 financial year, alongside hundreds of millions of dollars in remediation and refunds for consumers and investors.

The regulator secured $480 million in civil penalties between January and June 2026, adding to $350 million secured during the first half of the financial year. Major outcomes included a $300 million penalty against Union Standard International Group, $35 million penalties involving HSBC Bank Australia and Macquarie Securities, and a $26 million penalty against Westpac.

ASIC also reported $643.5 million in remediation, refunds and other payments to customers and investors in connection with its work during the reporting period.

Across the financial year, ASIC launched more than 250 investigations, filed 32 new civil proceedings and commenced 18 criminal prosecutions. It recorded 25 criminal convictions, including 21 custodial sentences.

With the recent appointment of Sarah Court as Chairperson, former Deputy Chair and head of Enforcement, there is no expectation ASIC will slow its enforcement activities or change its approach.  If anything, further hardening of its approach to significant or systemic conduct affecting consumers can be expected for the balance of 2026 and through 2027.

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The contents of this update do not constitute legal advice, are not intended to be a substitute for legal advice, and should not be relied upon as such. They are designed and intended as general information in summary form, current at publication, for general informational purposes only. You should seek legal or other professional advice concerning any particular legal matters you or your organisation may have.

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