Australia's Council of Financial Regulators sets 2026 systemic risk priorities and will publish a December roadmap to reduce regulatory burden

Australia's Council of Financial Regulators (CFR) issued its December quarterly statement outlining progress on regulatory reform and inter-agency work to address financial stability risks, and agreed to publish a “better regulation” roadmap in December. The statement also sets collective priorities for 2026, spanning geopolitical preparedness, operational resilience including cyber and third-party risk and Artificial Intelligence, systemic liquidity stress readiness, and high household leverage. Work on reform initiatives included implementing actions from the CFR Review into Small and Medium-sized Banks, with the Australian Competition and Consumer Commission joining discussions on consultations and policy development aimed at greater proportionality, reduced reporting and simpler licensing. In response to the Treasurer’s request, CFR members and other regulators including the ACCC, Australian Taxation Office, Australian Transaction Reports and Analysis Centre and Australian Financial Security Authority are developing a roadmap that is expected to include over 50 commitments from the economic reform roundtable to reduce regulatory burden over the next two years, alongside efforts to streamline and harmonise data collections and identify priority legislative reforms. On risks, the CFR noted a noticeable increase in investor lending and a pick-up in some riskier lending, and supported the Australian Prudential Regulation Authority’s activation of limits on high debt-to-income lending to contain housing-related vulnerabilities; it also endorsed publication of a new transparency report on CFR initiatives. The update included the Australian Securities and Investments Commission’s assessment that some private credit providers’ governance, valuation and disclosure practices fall short of industry best practice. Next steps include publication of the better regulation roadmap in December and continuation of the inter-agency work program against the 2026 priority areas. Phase 2 of APRA’s system risk stress test is scheduled to conclude in mid-2026 with a report on findings, and the CFR has updated its sub-group structure to reflect 2026 priorities.