The Australian Securities and Investments Commission (ASIC) is preparing to scrutinise how banks deploy artificial intelligence when dealing with customers. The move puts consumer outcomes at the centre of the sector’s AI adoption.
According to Retail Banker International, the review will cover AI applications already in use across the banking industry and those still being planned, with a particular focus on how these tools affect customers.
To avoid duplicated effort, ASIC intends to coordinate with the Australian Prudential Regulation Authority (APRA), which is running its own work on AI-related risks.
ASIC set out the AI review as one of five banking sector priorities in a letter linked to its 2026–27 corporate plan. The letter is designed to help banks plan their resourcing and flag matters that boards and senior leadership should address over the coming year. The regulator stressed that its attention will stay on the consumer impact of banking activity.
The AI work follows ASIC’s Report 798, Beware the gap: Governance arrangements in the face of AI innovation, released in October 2024. That report found financial services firms were taking up AI faster than their governance and risk assessment frameworks could adapt, and it highlighted weaknesses in how consumer risks were being evaluated.
ASIC oversees corporate, markets and financial services conduct in Australia.
Beyond AI, the regulator will launch a review of lender conduct. It is expected to look at the 2024 changes banks made to short-term variable pay for proprietary lenders, how lenders use referrers, and how lenders supervise brokers. Banks offering buy now, pay later products may also be drawn into a compliance review of those providers’ credit law obligations, due to start in early 2027.
ASIC also plans to complete its review of debt buyers and contingent collectors, including how lenders monitor them, and publish the results in the third quarter of 2026–27. Banks are expected to measure their own practices against those findings. The regulator has further urged banks to revisit their hardship arrangements in light of Reports 782 and 815 and identify any necessary changes.
On scams, ASIC will collaborate with Treasury, the Australian Competition and Consumer Commission, and the Australian Communications and Media Authority on the Scams Prevention Framework, which is set 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.”
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