The Australian Securities and Investments Commission (ASIC), the country’s corporate watchdog, is preparing to scrutinise how banks deploy artificial intelligence, both current and planned, in their dealings with customers. The review is one of five banking priorities in its 2026–27 corporate plan.
According to Retail Banker International, the AI review will look at new and upcoming AI applications across the banking industry and how they affect customers.
To avoid duplicating effort, ASIC will coordinate with the Australian Prudential Regulation Authority (APRA), which is carrying out its own work on AI-related risks.
The review builds on ASIC’s earlier findings. In October 2024, the regulator published Report 798, Beware the gap: Governance arrangements in the face of AI innovation. It concluded that financial services firms were taking up AI faster than their governance and risk assessment processes could keep up. The report also found shortcomings in how firms evaluated the risks to consumers.
ASIC set out its priorities in a letter to the banking sector. The letter is meant to help lenders plan their resourcing and to flag matters that boards and senior executives should address over the coming year. The regulator said consumer outcomes would stay at the centre of its oversight of banking activity.
ASIC is Australia’s corporate regulator and oversees conduct across the financial services sector, including banking.
Beyond AI, ASIC plans a separate review of lender conduct. It will cover the changes banks made in 2024 to short-term variable pay for proprietary lenders, how lenders use referrers, and how they supervise brokers. Banks offering buy now, pay later products may also be caught up in a compliance review of those providers’ obligations under credit law, which is set to start in early 2027.
ASIC also expects to finish its review of debt buyers and contingent collectors, including how lenders monitor their behaviour. It will publish the results in the third quarter of 2026–27 and has urged banks to compare their own practices against the findings. Banks have also been asked to reassess their hardship arrangements in light of Reports 782 and 815 and to identify any changes needed.
In addition, ASIC will work with Treasury, the Australian Competition and Consumer Commission and the Australian Communications and Media Authority on the Scams Prevention Framework, which is due to take effect in March 2027.
In its letter, ASIC said, “Australia’s banking sector plays a vital role in Australia’s economy and the daily lives of consumers and businesses. The sector operates in an environment characterised by strong competition, rapid technological change and increasing geopolitical uncertainty.”
Copyright © 2026 RegTech Analyst
Copyright © 2026 RegTech Analyst
