Day Three Session Summaries
These session notes are provided for the use of Summit attendees only and should not be distributed to a wider audience.
Consumer Pulse 2026: Insights into Non-Bank Lending in Australia
Wednesday 24 June, 9:10am
Dr Campbell White and Mr Gavin White from Pyxis Polling & Insights
Key Takeaways
Pyxis Polling presented the latest wave of consumer research commissioned by AFIA, delivering a comprehensive view of how Australians are engaging with the non-bank lending sector in 2026.
The research shows concerningly that Australia is in a prolonged cost‑of‑living crisis. Most Australians are still meeting expenses, but they feel they are not getting ahead, which is driving dissatisfaction. This pessimism extends to expectations for both the economy and their personal financial futures and is more negative than seen in recent crises such as the GFC and COVID. While frustration is rising, it has not yet fully translated into hostility toward the finance sector.
Finance industry perception gap
The finance industry is still viewed as important, functional, and technologically capable, but there is a clear perception gap: Australians see it as profitable and product-rich, yet requiring uplift in fairness, responsiveness, and customer focus. Security and fraud protection are top priorities, and there is growing acceptance of data use and AI where it delivers tangible customer benefits.
Within lending, the system is generally seen as working, but with a critical tension: it is perceived as “too easy for some and too hard for others.” This reflects personal experience: people who struggle feel excluded, while those doing well perceive excess access elsewhere.
Small businesses in particular report self-reliance in financing business activities, often relying on personal savings. This may reinforce a sense that the system does not adequately support them.
Insights for the non-bank lending (NBL) sector
A central structural issue is the lack of clear understanding of the non-bank lending (NBL) sector. Consumers broadly understand the two ends of the spectrum – banks (trusted, conservative) and payday lenders (high-cost, distrusted). However, there is no clear mental category for lenders in between.
As a result, NBL providers risk being implicitly grouped with payday lenders, inheriting negative perceptions despite being regulated and serving legitimate, unmet needs.
Overall, while the system is seen as broadly functional, there is a growing expectation that financial institutions, including NBLs, demonstrate fairness, improve access, and clearly communicate their role, particularly in helping customers who currently ‘fall through the cracks’.
Non‑bank lenders (NBLs) face a clear strategic challenge and opportunity: they operate in a ‘missing middle’ between banks, which are seen as safe but restrictive, and payday lenders, which carry strong negative perceptions, yet they lack a distinct and well‑understood identity of their own. This creates a risk that consumers implicitly group them with high‑cost or predatory lending despite their regulated, mainstream role.
To address this, the research points to NBLs needing to actively define and communicate their position as fair, responsible providers of access to finance for individuals and small businesses that fall outside traditional bank criteria but are still creditworthy.
At the same time, NBLs can differentiate by leaning into areas where expectations are rising, notably particularly responsiveness, security, and responsible data use, and by positioning tools like AI as enhancing fairness and outcomes rather than replacing human judgment.
AFCA: Navigating Conduct, Compliance and Consumer Expectations in 2026
Wednesday 24 June, 9:50am
Natalie Cameron, Lead Ombudsman, Banking and Finance, AFCA
Fireside chat with Roza Lozusic, Executive Director Policy and Public Affairs, AFIA
Key Takeaways
A sharp rise in complaints across the credit, finance, and lending sector is underpinned by a context of increasing economic stress.
Complaints (excluding the major banks) are up 31% year‑to‑date, reflecting broader trends including:
Rising cost‑of‑living pressures
increased demand on debt helplines
Persistent mortgage and housing stress
A shift in financial hardship affecting younger cohorts (particularly those aged 30–34), who are now the most represented in insolvencies
Macro conditions are clearly feeding into dispute activity, with strong growth in complaints related to personal loans, credit reporting, and financial difficulty. While scam‑related complaints remain elevated, there are signs of fluctuation rather than sustained escalation.
Despite the increase in complaints, there are positive indicators in how firms are handling disputes. Around 66% of complaints are resolved at the initial referral stage, meaning many issues are settled directly between firms and customers without requiring AFCA intervention. This represents an improvement on the prior year and suggests that internal dispute resolution processes are generally effective when engaged early. However, AFCA is still receiving complaints faster than it can close them, leading to growing queues and indicating that demand pressures are outstripping system capacity.
A key insight from the complaints data is that most issues are not about firms refusing to help customers, but about failures in process, particularly communication and responsiveness. In financial hardship cases, the leading issue is failure to respond to requests for assistance, rather than denial of hardship arrangements. This points to breakdowns in how firms identify, escalate, and manage vulnerable customers, especially at frontline levels. Similarly, many credit reporting complaints arise from relatively straightforward errors or misunderstandings, suggesting opportunities for earlier resolution and better data quality controls.
AFCA’s systemic issues work reinforces this view, highlighting recurring problems across the sector such as poor communication during operational or product changes, lack of coordination between collections, hardship, and complaints teams, and inconsistencies between documented policies and actual customer experience. These issues are particularly risky because they can affect multiple customers and escalate into regulatory scrutiny if not addressed. Notably, breakdowns often occur not in policy design (which is generally robust) but in execution and internal alignment, especially under rising workload and complexity.
Another emerging challenge is the growing role of paid representatives, such as debt management firms. While they can play a legitimate role, their increased use is contributing to inefficiencies, including templated or low‑quality complaints, duplication, and delays in resolution. In some cases, they may not act in the best interests of consumers or may obstruct communication between AFCA and the complainant. AFCA has responded by tightening expectations around conduct and signalling a willingness to take action where standards are not met, but the trend is adding friction to the dispute resolution process. Industry has been instructed to refer cases to AFCA where paid representatives are not aligning to the AFCA expectations.
As financial stress intensifies, complaint volumes will continue to rise, but the key risks for providers lie less in credit decisions themselves and more in how customers are treated throughout the lifecycle, especially when they encounter difficulty. Firms that invest in clearer communication, faster and more coordinated responses, and stronger frontline execution of hardship and complaints processes will be better positioned to manage both customer outcomes and regulatory risk in a more challenging environment.
APRA: Building Systemic Resilience Across Financial Systems
Wednesday 24 June, 11:00am
Therese McCarthy Hockey, Executive Board Member, APRA
Fireside chat with Diane Tate, CEO, AFIA
Read Therese McCarthy Hockey’s full speech at the 2026 AFIA Risk Summit here.
Geopolitical Risk: An Accelerator with New Features
Geopolitical events (such as the Iran conflict) create shocks that flow through to businesses of all sizes, including financial services and insurance firms, even if they appear distant.
Much of geopolitical risk manifests by accelerating pre-existing risks — credit, market, operational, and compliance — rather than creating wholly separate categories.
Practical advice: Revisit existing risk management practices. Check whether risk appetite statements, scenario analysis, stress testing, and other tools are calibrated to reflect heightened geopolitical uncertainty. Embed geopolitical considerations into how risks are already identified and managed.
Two emerging features warrant specific attention:
Personnel risk: Security settings, data access controls, and team management practices — identified as a relatively weak area across many organisations.
Political / sovereign risk: Decisions by foreign governments or regulators that can directly affect Australian businesses (e.g., restrictions on access to critical technology or services). This builds on earlier discussion of third-party and concentration risks in AI.
International Cooperation in a Complex Environment
International forums (such as the Basel Committee and Council of Financial Regulators) remain important, but consensus is becoming harder to achieve amid differing national postures.
Adopt a long-game perspective: progress may be incremental, and maintaining relationships and dialogue is valuable even when immediate consensus is difficult.
Positive signals exist — for example, Japan’s increasing openness to international cooperation on banking and financial issues after a historically more closed approach.
In both domestic and international roles, the key is to stay prepared, read the signals, and keep working on important issues so that good ideas or positions are ready when the moment or threat emerges. Timing matters; valuable work should not be abandoned simply because it is not immediately adopted.
Board Engagement and Governance
Boards need to be actively engaged and informed. The language used was clear: boards “need to act.”
APRA’s message is framed as being in the long-term interest of the business — better resilience, sustainability, and preparedness — rather than purely a regulatory obligation.
Risk decisions almost always involve trade-offs. For example, accelerating patching reduces one set of vulnerabilities but can introduce new risks (malicious patching, downtime, or impacts on other operational metrics). Boards should explicitly consider these trade-offs.
Similar dilemmas apply to AI adoption itself: moving too slowly or too quickly both carry risks. Governance should focus on understanding what is being managed, the organisation’s risk tolerance, and whether it remains appropriately calibrated.
APRA’s Forward Supervisory Priorities
APRA is operating on a four-year planning cycle with a strong emphasis on cyber resilience and operational resilience, reflecting the fast-changing environment.
Key focus areas ahead include:
Quantum computing preparedness (aligned with ASD guidance and timelines).
Continued work on AI governance, risk management, and resilience (building on recent industry letters).
Broader digitalisation of finance and new regulatory powers potentially coming into effect (subject to parliamentary processes), including oversight of large automatic facilities.
APRA works closely with ASIC and other Council of Financial Regulators (CFR) agencies. Key messages on governance, systems, and controls are relevant to both APRA-regulated and non-APRA-regulated entities.
Overall Messages
Many of the challenges discussed are best addressed by strengthening and adapting existing risk management foundations rather than creating entirely new frameworks.
Geopolitical and technological risks (AI, quantum) require boards to engage deeply with trade-offs and to ensure risk appetite and controls remain fit for purpose.
International cooperation remains essential but requires patience and a long-term mindset.
Preparation and persistence matter: organisations that stay alert and keep important issues on the agenda will be better positioned when threats materialise or opportunities arise.
ABSFEO Update
Wednesday 24 June, 11:30am
Lynda McAlary-Smith, Australian Small Business and Family Enterprise Ombudsman
Fireside chat with Diane Tate, CEO, AFIA
Key Takeaways
Regulatory Environment & Predictability
Small businesses need a practical and predictable operating environment, which is currently undermined by frequent rule changes across all three tiers of government.
Australia’s regulatory culture tends to respond to every issue with new rules without adequately assessing cumulative impact or whether intervention is necessary.
The 10-year extension of the Responsible Lending Obligations (RLO) exemption for business lending is a positive development.
Access to Finance
Data visibility remains a challenge at the micro end of small business, where lending is often intertwined with personal finances. Post-COVID trends include more aggressive enforcement of personal guarantees in commercial leases.
Flexible lending assessments are important to support newer business owners who may lack traditional security such as home ownership.
Early Indicators of Small Business Distress
Key warning signs include disconnection from trusted advisors and failure to maintain timely ATO lodgements (ATO is actively pursuing debts). Cash-flow pressures are intensifying due to late payments between small businesses, the introduction of Payday Super (1 July 2026), RBA surcharging changes and other budget measures.
Behavioural indicators: businesses “going into their shell”, reduced engagement, mental health strain and willingness to accept non-commercial finance terms out of desperation.
Recommended approach: proactive, open conversations with clients about emerging obligations and their awareness of key issues.
Role of ASBFEO & Opportunities for Collaboration
ASBFEO aims to be a credible, independent voice at senior policy and regulatory tables, drawing on direct experience of how legislation is developed and implemented. Strong engagement is already occurring with Treasury, parliamentarians (government, opposition and crossbench) and senior public servants.
Open invitation for outreach, including webinars and capability-building support for AFIA members and their clients on digital/financial literacy and general business operations. ASBFEO provides a safe space for dispute resolution and is keen to collaborate further with industry associations.
Closing Remarks with the AFIA Board
Wednesday 24 June, 9:10am
Diane Tate, CEO, AFIA
Mario Rehayem, CEO Pepper Money and AFIA Board Chair
Cameron Poolman, CEO OnDeck Australia and AFIA Board Member
Key Takeaways
AI Transformation Across the Sector
AI adoption is a live reality for lenders of all sizes, with organisations at differing levels of maturity. Many may still be underestimating the pace and implications of change.
Implementation feels like “changing an aeroplane engine in flight.” The panel stressed the need for calm diligence, thorough risk understanding, and ensuring that excitement about AI is matched by clear responsibility frameworks. These considerations must begin with management and be properly escalated to boards.
Risk Interconnectivity and the Need for Agility
Risks are highly interconnected. The industry requires a culture that is comfortable with continuous learning and rapid adaptation.
Strong internal teams, ongoing stakeholder engagement, and preparedness to respond in real time were highlighted as essential.
Strategic planning should also reflect broader market realities, including research indicating that approximately 30% of small businesses rely on personal funds or personal borrowings — a factor that may affect total addressable market assessments.
Evolving Risk Perspectives (Next 2–3 Years)
Firms must pay greater attention to operational risk and how it is understood and managed.
Heightened focus on management accountability and the flow of risk information to boards.
Recognition that external AI-related threats (including advanced applications such as agentic AI in payments) may be more material than previously assessed internally.
Leadership Role in Building a Resilient Risk Environment
A united industry voice, coordinated through associations such as AFIA, delivers greater impact with government and regulators. Broader membership participation strengthens this collective position.
Customer-centric leadership remains fundamental, going beyond compliance to consistently do the right thing by customers and small businesses.
Active engagement in working groups, committees and knowledge-sharing forums supports collective learning and better-informed decision-making.
Leaders should contribute to constructive industry narratives that highlight the sector’s economic contribution, supporting more balanced policy discussions.
Forward Outlook
Panellists noted potential economic headwinds facing small businesses and households, including signs of stress such as eroding redraw and offset balances in mortgages. Proactive, well-prepared leadership is crucial in navigating ongoing uncertainty.