AFCA has published Edition 8 of its Systemic Issues Insight Report, covering systemic issues identified and examples of better practice to prevent systemic issues from arising across the financial services sector in the first half of the 2025–26 financial year.
The report identified cross-sector themes, including failure to reflect obligations in operations, complaint handling failures, system migrations and automation failures, third-party administration and operational risk oversight, claims handling delays and consumer vulnerability not embedded into processes.
It also identifies issues specific to sectors: banking and finance, general insurance, life insurance, Investments and advice, superannuation, and small business.
Outcomes included financial remediation, as well as non-financial remedies such as correction of consumer credit reporting and member account records, improved claims handling oversight, including stronger monitoring of delays and escalation controls, system fixes to address calculation errors, platform configuration issues and transaction processing limits, and operational reforms to better identify and support vulnerable customers.
AFCA observed that systemic issues investigations reflect increasing reliance across financial services on automated workflows, structured decision tools, artificial intelligence and machine learning applications, outsourced administration and system-driven processing.
It says these arrangements can improve efficiency and consistency. However, systemic risk may arise where system outputs are treated as determinative without sufficient human oversight, where configuration settings do not adequately account for exceptions, or where firms lack clear visibility over the performance of outsourced operational processes.
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Author: David Jacobson
Principal, Bright Corporate Law
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